Afford Anything - Money Doubles Every 10 Years (and Most People Never Notice!), with Scott Yamamura

Episode Date: February 28, 2025

#586: If you are a complete beginner at finances, or if you know someone who is, this episode is for you. The biggest hurdle for beginners? Money seems complex and intimidating. But Scott Yamamura, author of Financial Epiphany, explains personal finance doesn't have to be complicated. He breaks compound interest into three easy-to-grasp frameworks: Money as a Multiplying Ability: Just like athletes have peak physical abilities in their 20s, your money has its greatest multiplying power when you're young. At age 22, every dollar invested can multiply 16 times by retirement (assuming a 40-year career and 7.2 percent returns). The Doubling Framework: Money can double approximately every 10 years with average market returns. This explains why a dollar invested at 22 becomes $2 by 32, $4 by 42, $8 by 52, and $16 by 62. The Halving Concept: With each decade that passes, your money's multiplying power gets cut in half. This is the inverse of the above idea. Scott shares how these simple frameworks helped him front-load his son's college savings. "We can stop now because it's going to double," he said. For beginners struggling with analysis paralysis, Scott offers a Rubik's Cube analogy: You don't need to understand all 43 quintillion possible combinations to solve it — you just need one simple method to get started. Similarly, you don't need to master every financial concept to begin investing. The most important step is just to get started. You can learn the complexities later, but starting early gives your money more time to grow. Scott also emphasizes finding your "why" — a purpose bigger than just accumulating wealth. He shares a moving story about a man named Ernie who funded his mission trip to Sierra Leone, showing how money can be used to make a profound difference in people's lives. Timestamps: Note: Timestamps will vary on individual listening devices based on dynamic advertising run times. The provided timestamps are approximate and may be several minutes off due to changing ad lengths. (0:00) Introduction  (1:16) Scott discusses reframing compound interest as "money multiplying ability" (3:47) Money multiplying power works like athletic ability - strongest when young (7:02) Scott addresses challenges of saving when young and broke (10:29) Explanation of the Rule of 72 for doubling money (13:43) Every dollar invested at 22 multiplies 16x by retirement (17:08) What to do if you're starting late with retirement savings (20:44) Three core ideas of compound interest (23:19) Using the concept of "halving" to create urgency to invest (30:30) Finding your "why" to overcome financial temptations (33:07) Scott shares personal story about Sierra Leone mission trip (36:46) The joy of spontaneous giving as motivation for building wealth (40:53) Balancing retirement savings with paying off debt (43:38) Simplifying finance through the Rubik's Cube analogy (52:50) Paula's wrap-up with actionable investing advice for beginners For more information, visit the show notes at https://affordanything.com/episode586 Learn more about your ad choices. Visit podcastchoices.com/adchoices

If you are a complete beginner at finances, or if you know someone who is, this episode is for you. The number one thing that I hear from beginners is, oh, I need to learn more about money. But it feels complicated. It feels overwhelming. Well, today's episode simplifies and strips down the complexity. We boil it down to the basics that a beginner needs to know. And it really boils down to just get started. In today's episode, Scott Yamamura joins us to share three frameworks for thinking about compound interest. If you're a beginner, this episode is for you, and if you're not, then this episode is for the people in your life, your loved ones, who have said to you, man, I really need to learn more about that money thing.

Welcome to the Afford Anything podcast, the show that understands you can afford anything, but not everything. Every choice carries a trade-off, and that applies to your money. money, time, focus, and energy. This show covers five pillars. Financial psychology, increasing your income, investing, real estate and entrepreneurship. It's double eye fire. I'm your host, Paula Pant. I trained in economic reporting at Columbia, and I help you understand money so that you can build wealth. Welcome, Scott. Thank you very much. Good to be here, Paula. That's great for you to join us. Scott, if I say the word compound interest to a beginner, I've lost them right away, because that sounds boring. That sounds like something that your eighth grade math teacher would talk about.

what if we talk a little bit differently? What if we talk about the ability that a person has? Let's say you're 22. What kind of ability do you have? Right. So compound interest. That's the old bankers term. And it kind of can rub us the wrong way.

It feels like it's cold, hard, and it's like hugging a cash register. It's about as comfortable as that. So what have we reframed compound interest? I mean, there's so many different ways to say it. There's save early, save 15% of your income, have, 10 times your income saved by the time you're retiring. There's so many ways to get up this effect of compound interest. But I think for the current generation, it might be nice to hear it a different way. So the way that I like to frame compound interest is in terms of an ability to multiply money.

So when you think about that, an ability, it really pulls us away from the accumulation of wealth. And many people, it might be from their families, their culture, their faith, or otherwise, the accumulation of wealth might be something that you don't talk about. It might be something that feels a little taboo even. But an ability that we have to multiply money, that's something that has to do with us. It's not about this object that we're storing up. It has to do with an ability we have a lot more like athletic ability, say, for instance. You mentioned the age 22. So, for instance, Olympic gymnasts, Olympic ice skaters, NFL football players. When are they all in their prime? It's very commonly in their early 20s. So we have this amazing physical ability that dissipates

over time. There's this corridor of time where an athlete needs to jump on their ability before it goes away. And the same thing is with money. Money actually is very much like that, where when they say invest early, I wish I could go back and do it all over again, people are talking about in their 20s. Retirees are talking about going back to their 20s and saying, let me invest with vigor and with gusto at this time, because that's like the parallel of when I had my greatest athletic ability. I had my greatest money multiplying ability at that time. So thinking about money in terms of an ability, it really changes it. It takes away all the taboo, and it says, just like in sports, hey, do this now before you lose it. Use it before you lose it.

But I'm going to push back on that a little because it's easy with a benefit of hindsight when you're 50 and you're making the most money you've ever made because you're so deep into your career and you've achieved seniority and you've had many promotions. It's easy at that age to project your current income situation backwards. and say, oh, man, if I had only saved more then. Whereas when you're 22, for most of us, we're broke and we don't have any real ability to make money. Yeah. No, I think that's perfect. And I've thought through these different avenues because one of the misconceptions is I will wait until I'm older because that's when I'll make more. That is when I will be promoted. That is when

I'll have more resources to use, however very commonly lifestyle inflation comes in to pay. play. Some of the statistics are, say, up to 78% of folks might be living paycheck to paycheck. At any age and stage in their career, 77% might be in debt, up to about $100,000 or so. And so it's very common at every stage, even up until retirement, to be practicing these principles with money where we're just not investing. We're just not acting with confidence. Let's wait until my career is further long. Let's wait until I understand money better. let's wait until I can make better investment decisions and really get this. But it's really about for the common person starting early.

Starting early and very common things. A 401k plan, an IRA, the S&P 500 index fund or target date mutual fund. If we got started the common person at age 22 with any of those, that by comparison, many advisors say does a lot more good than waiting to 52 and getting started then with gusto. That comparison. I've heard one advisor say that the first 10 years of investing is worth about the latter 30. Right. But I mean, when I was 22, my full-time salary didn't come was $21,000 annually. That was in 2007, so you have to adjust for inflation. But adjusted for inflation, let's say that's ballpark about $30,000 a year in today's dollars. When you're earning a full-time salary

of $30,000 a year, and you're paying rent, you're paying utilities, you're paying, you're paying, for your gas. At that time, I was paying for my health insurance because that was prior to Obamacare. And so you couldn't stay on your parents' health insurance until you were 26. So you're paying health insurance. I mean, it's incredibly hard on a $30,000 annual salary to set aside even a couple hundred dollars a month.

And this is a beginner's episode. So speaking to all of the beginners out there, a lot of them, I'm sure, listening to this thinking, well, you know, this is a little. This just sounds out of touch. I make $30,000 a year. I've got student debt. No, I think that's beautiful to look at that because that's reality. And so advisors and financial coaches will just commonly say, do what you can.

Now, doing what you can with understanding is totally different. Without that understanding, we act timidly. And that's exactly what I did. Some of the decisions I would have done differently is, for instance, instead of buying a new car with debt, it's probably buying used. I mean, okay, when I was $22, my car was $400. Not $400 a month. The car was $400. The entire car was $400.

Incredible. Yeah, the guy wanted $450 for it, but I talked him down to $400. Wow. Okay. Yeah, you got a much better deal than I did. So again, for a beginner who's broke, nobody's even thinking about buying a new car. Your apartment isn't even safe enough to park one outside of it. It would get stolen, like, within a day.

Yeah. Yeah, certainly there's going to be different folks at different income levels, different stages, different levels of support from the family, this or that. But once again, coming back to if there's understanding, we can act differently just with that understanding as our foundation. We commonly are bringing up that age of 22. We have potentially our first career. We're done with college, and we have this opportunity to invest. We might be hearing about a 401k plan for the very first time if the company that we work at offers that. And so if we have that understanding. It can even come years before where we're preparing. We can prepare for that

rather than being surprised. And many, many of my colleagues were middle age and we're starting right now to become interested and versed in finances. And I myself wish I had known that back when I started earning. So, yeah. Now the math around every dollar that you invest when you're 22, assuming that you have a 40-year career, that dollar that you invest at the age of 22, it multiplies 16 times, assuming a 7.2% long-time annualized interest rate. But since this episode is for beginners, I want to really focus on that 22-year-old who is driving a $400 car, or with inflation, maybe it's a $600 car in today's dollars, when you're driving a car that's that cheap, you know it's going to break down.

and so you know you need a little bit of money set aside for those repairs. And then for most people at 22, they've got student loans. The majority of college graduates have student loans. So why should a 22-year-old put money in a 401K? Yeah. I want to harken back really quickly to the athlete thing because it's hard when we're in those we're squeezed like that. And if we think about someone who has the ability to become, say, an NFL quarterback,

And if they started to play middle school or so football, and someone told them, you have this potential, you need to do this. You might need to make sacrifices. You might need to own the $400 car. You might need to go mow some lawns. You might need to go do these sacrifices in order to play football because I think you've got this knack. And if you keep with this, you're going places. And this is going to, you're going to regret if you don't ever do this and you miss this opportunity. that's why I like going back to ability, because we're willing to make sacrifices,

and we're willing to figure it out because our number one are a big enough why can overcome anyhow. We will figure the rest out when we have a big enough why. And that's why I'd love coming back to athleticism and paralleling that with multiplying money. Okay. Now, back to age 22. So rules of thumb, if most people look at finances and dry, uninteresting, intimidating thing,

full of shame, guilt, and regret. That's very common for folks. And like I said, if most of us, by the time we reach middle age, are thinking I have this wake-up call with finances now, I might need to be taking care of my parents. Someday, that's going to take finances. I'm thinking of retiring one day. That's not too far off. I need

to be thinking about finances. My children are going into college. I need to be thinking about finances. We're pretty much going to be faced with thinking about finances by middle age. But We need rules of thumb. So if people have not thought about finances because it's so challenging and we've had analysis, paralysis up to a certain point, then what about offering a simplified way? And that's what I try to do through offering up financial epiphany.

So the first financial epiphany, which is a rule of thumb, is that money under very common circumstances can double every 10 years. So if we have a dollar and we put it in a very common place to invest 401K, plan, IRA brokerage account at a very common 7.2% interest rate, which those sorts of investments, statistics will say they might bring around 5 to 8% return. Now, if it's the stock market we're just looking at, that might be about 7 to 10% annualized rate of return. So I like 7.2 because it leads to easy math. Right. And just to pause here, so what you're talking about is what's called the Rule of 72. It's a mental math shortcut in which

which 72 divided by the long-term annualized rate of growth on your money is the amount of time that it takes for your money to double. So, for example, if you earn a long-term annualized 7.2% interest rate, it'll take 10 years for your money to double. If you earn a long-term annualized 8% interest rate, your money will double in nine years, long-term 9% annualized interest rate, your money will double in 8 years, and so on and so forth. Thanks for pointing that out. Yeah. Running under the hood of the financial epiphanies is the rule of 72. And that is another rule of thumb that actually is very helpful because it can get you to win with money by simply knowing a very grade school like calculation. Right.

And so we've got the 72 divided by 7.2 rate of return equals 10 years to double our money. Now we have a very simple path to look at. We've got, okay, every 10 years, money can double. no matter what I put in, if I put in a dollar or $1,000 or $10,000, this thing is multiplying by double every 10 years. And then if we bring in another very common number within anyone's career, 40 years of work. So what I'd like to do is start to lock in numbers because money can be very much like a constantly roving variable, running races around us. So, but if we asked money to please pause, sit down and behave long enough for us to understand it. By choosing numbers, by choosing

a very common path to take, we're talking about starting a career at age 22. We're talking about a 40-year career and earning this 7.2% rate of return over these 40 years. Now we really can start to understand it. Money can be doubling every 10 years. That means when we put in a dollar, it's 10 years later, it's 2, 10 years later, it's 4, 10 years later, 10 years later. it's eight, 10 years later, it's 16. So after a 40-year career, we have this multiplying power of 16, and that comes back to our ability. We have the multiplying power of 16 when we start our careers. You could also say it this way. Say you took a different path and went school longer, started your career later. Well, you have that multiplying power of 16 if you work a 40-year

career, even if you start at age 32. Or let's say you work an even longer career and you work 50 years. Now you don't have the multiplying power of 16 anymore. You have the multiple power of 32. So these familiar numbers of doubling, you know, one, two, four, eight, 16, they're lovely because we can continually refer back to them again and again and again to understand I'm at this age. My multiplying power is currently four, I might say. So I'll say, okay, well, every, you know, $10,000 I put in can turn into $40,000.

at retirement, maybe it won't go by this. Maybe I'll go ahead and choose to invest that instead because I have an understanding of the input and the output. And that's the power in all of this. So just to make the math clear, all right. So when you're 22, you put in $1. By the time you're 32, that $1 has turned into $2. By the time you're 42, those $2 have turned into $4.

By the time you are 52, that's turned into $8. And by the time you're 62, it's turned into $16. And if you work until you're 72, oh, well, and heck, even if you don't, you're not going to withdraw your entire retirement balance on the day that you retire. Not all of it. So some portion of your money that you put into your retirement accounts will still be there when you're 72. So that portion of your money that's still in your retirement account, by the age of 72, that has now turned into $32. And when you're 82, that's now $64. Yeah.

So if you're William Bengin, then you're saying, okay, it's either 4% or 5% that we're pulling out. There's a lot of it still left to multiply. And that's the lovely part. This book really focuses on the most common scenario, which is working age 22 to 62. So yes, of course, we can continue to keep multiplying money after that. We may use something like the bucket system to have different ways of conserving money and spending money while all this out here. is still left to multiply in the market.

But because we're spending it down, and it's very common for the retiree, for their account to diminish slowly over time. It's no longer doubling on its own. It's definitely staying where it's, it might go up for some, but for many of us, it slightly goes down. And so that gets a little bit more complicated.

Maybe that's book two. Right, because this is a beginner's episode, so we want to stay focused on the basics, the basics for people who are starting out. But so far in this conversation, we have assumed that you're a beginner and you're 22 years old. What if you're a beginner and you're 52 years old? Let's say that you woke up today and it's your 52nd birthday and you're going, gosh, I'm in my early 50s.

And I really haven't thought about retirement savings yet. Yes, I love this question. At age 52, what we're saying with this rules of thumb, these financial epiphanies, is that we have the power of two at the age of 52, when we have 10 more years to have our money double. And that's just for money that we have invested already, that we can continue to put more in. And what I love about that is because Warren Buffett,

the famed investor, says that if we're born in America, that we have won the ovarian lottery. And by that he means that in America, we have prosperity. We have opportunity, like nowhere else. In fact, in a few weeks, I'll be going to Sierra Leone, Africa. and that's known as one of the poorest countries of the world. There are places in the world where money doubling is just not even possible. It's just not going to happen.

And so we are so fortunate here. The doubling of money, say you go into a casino with $1,000, and you come out with $2,000, and you just want against the house. You're feeling very good, very good. The doubling of money is no small thing. It is, we are very fortunate to live in a place where that is possible. and to value that, it is something else. Now, when we're younger, we have a greater multiplying power and money can double more.

And so, all right, you say the age 52. Now, many at the age 52 will have kids that might be going into college or something. So another thing besides looking out for ourselves and doubling our money and maybe even doubling down and doing things like putting in even more into our 401K plan, what the government allows us to do those extra amounts that we can put in to multiply, is that the catch of contributions. We can start looking at the younger generation, whether it's our own family,

whether there's nieces, nephews, grandchildren, because they're coming up right behind us and they may not know about their multiplying power. So I think it's very important to consider would we be willing to invest in the younger generation? Right, but if you're 52 and you're not prepared for retirement, you have virtually no balance in your 401K, a very small balance in your 401K,

what do you do for yourself? Right. So absolutely jumping in with investing in the 401K because of the company match and tax advantages and this and that. We have other considerations. Financial advisors may lay out options such as do you want to retire at age 602 or are you willing to work longer? That will give your money without touching it more time to multiply. So the options are to increase income and decrease expenses.

So some of those suggestions might be working longer. And so now if instead of retiring at 62, many people are deciding to retire later as they realize maybe they didn't take advantage of their multiplying power. And so if it's 72, just looking at these numbers simply, now they've gone from the multiplying power and the ability to multiply money by two. Now it's four. Now they can 4x their retirement account and they can meanwhile dollar cost average money into that over the, those 20 years as well. But absolutely, that's one of the ways that we can increase our income leaders is by increasing our working years. So when we talk about compound interest, there are really three core ideas that we want to draw out. One is what we talked about earlier with the rule of 72,

that money doubles, and the time in which it takes for money to double is 72 divided by the long-term annualized rate of return. So if we assume that our money is going to make a 7.2% return over the long term, then that means our money is going to double every 10 years. So that's the first core idea that we want to draw out related to compound interest. Yes. And then the second core idea is what we've also just talked about, which is that if you're 22, every dollar that you put in turns into $16 by the time you're 62.

So that's the second core idea. Talk about... Yeah, exactly. Exactly. Whereas if you're 52, every dollar that you put in turns into $4, assuming that you retire at the age of 72. The corollary to all of that, though, is a having. Can you talk about that? Yes, having as an H-A-L-F, half. So Daniel Kahneman talks about loss aversion, very common study. and we know that the feeling of losing something is twice as painful as the great feeling of gaining something. And so when we think about compound interest, we think about, well, okay, so I'm going to gain $1,000 later, right?

Okay, that feels good. Now, if we think about losing $1,000, now all of a sudden that hurts twice as much. We feel twice as much impact by that, by losing. losing a thousand than gaining a thousand. This concept of having takes advantage of loss aversion because we as human beings, we hate to lose things. It has double the impact on us. And so this is what I mean by that, is that when we have the power of 16, the multiplying power

of 16 with our money that we invest at age 22 and 10 years later, it halves into the power of eight at age 32, that can cause a sense of urgency. Oh my goodness, I had the power of 16 and 10 years I have the power of 8. I better act now. Every dollar that I invest now is going to do so much more than if I wait. And oh, if I wait from age 32 to 42 where I have the power of 4, oh my goodness, I just had the power of 8. Now I have the power of 4.

It's having. And so it causes this sense of urgency. And because loss ofversion is so powerful for the human system, it's something we can take advantage of. It's something that can cause us to take action. It has a little bit of a sting. Yes. And once again, to harken back to that of a sports athlete, you're not going to be able to be

the star NFL player until you're 60 or until you're 70. It is going to go away. Your sports ability is going to diminish. And we all know that. And it even parallels into just being a human being. Eyesight's going to go. Bones are going to creak. Not everything is going to work as well when we're 60 or 70.

and we all understand that. If we could come to the place where we understand money does the same thing, it follows the same path, then it can cause a sense of urgency and it can cause us to take action because what's on the other side of that, money sitting there that we like to find a place to spend instead. It tends to get spent. And so what we're trying to do is to give people the motivation

to instead spend their money that's sitting around is to instead choose to invest it. a sense of urgency here. That does create a sense of urgency, knowing that with each new decade of life, your power to multiply your money gets cut in half. If a person who's listening to this is trying to balance the desire to put money into retirement accounts with the reality that they have student loans, maybe they have some credit card debt, how do they balance those two? Right. So once again, a big enough why it can overcome anyhow. So if we now understand, something. Now, I do want to put out the word there timidly, because without a big enough why,

I acted timidly with money. Just why would I waste my time with this? Why would I go in with any gusto if I just don't know what's going to happen? So we tend to act timidly. But if we understand our multiplying power, if we understand the urgency that it is decreasing, that it is diminishing over time, we'll make those sacrifices. And now at least we're acting with some level of confidence. We know what's going to happen before we had no idea and we will get that wake up call later and see what's happening to our finances and I have seen that happen is that oh by the time I'm I'm ready to find out what happened whoops I wish I could go back 10 years I wish I could go back 20 years I would have done things differently and so regardless of our income and regardless of our past behaviors and if we

found ourselves in debt whether they were good choices or not I tend to think that a big enough why can overcome anyhow and that basically means when we understand our multiplying power we'll be able to make those sacrifices. And it's always going to be, can we increase our income and can we decrease our expenses? And we'll find a way. So we have that capacity to adapt. So far what we've talked about are three ways that a beginner can think about compound interest, three different framings of compound interest,

that are ideally motivating for anyone who's just getting started. The next thing I'd like to discuss is that in order to keep that motivation, going, you need a big why. Because there are so many spending temptations. You need a why that is bigger than all of that. So we're going to talk about money with a purpose. That's coming up next. The holidays are right around the corner and if you're hosting,

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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. Welcome back. How did you find and maintain a why behind your money? We talk about having a big enough why to keep us on track with finances. Now, there's something I call the path of snares and traps that can certainly stop us.

And if we don't have a plan with our money, these things are going to come after us. I call them the five Cs of financial debt. So it could be credit card, car, college, cake, under that is experiencing. Like let them eat cake. And wedding, wedding cake. So wedding, for instance, average wedding costs about $30,000, $10,000 is borrowed. So these are the big things we borrow and spend big on. And then condo, where we might buy bigger house and become house poured because of those things.

These things are coming for us. And they're waiting right around the corner for our money if we don't have a big enough why. And so what I look at is to have a people-based why. when we're looking for a product, we're looking for a deal. We're waiting for it to go on sale. We're willing to haggle the price down. We want a good deal for our money when it comes to a product. But when it comes to people and purpose, there's no price tag. The value of a person is limitless. It's infinite. And so when we have money for a product, that's one thing. But when we have money to invest in the to the betterment of someone's life, there's just no limit on that. And it's We may even feel like if we've got money to improve others' lives, that may be the reason we're on this earth. That may be the reason why I have available funds. And so let's talk about that a little bit, people-based why.

So in a few weeks, I'm going to head to Sierra Leone with my family, my son and wife. They haven't been there yet. How old is your son? My son is 15. Nice. And so... Will this be his first trip to Sierra Leone? This will be his first trip to Sierra Leone.

And so we've been to Korea. He's half Korean, half Japanese, he's been to Japan. This is going to be a lot different to Sierra Leone because it's traditionally been one of the poorest countries in the world and the unemployment rate is around 70%. I've been there before and I've served. And now when we go this time, it's going to be to help film a video that can be used to raise funds to build schools, churches, and clinics

and to help with basic needs to many of the villagers there. And so my son and I will be teaming up, and he's learning the skill of videography, and we're going to go try to tell these stories and later pull on some heartstrings. So others here in the U.S. might support some of our folks on the other side of what we call the bridge. The organization we're going to be going with us called the Bridge of Hope.

Now, I want to look back at the first time that I went there. When was this? About eight years ago. Mm-hmm. Yeah. Headed out to Sierra Leone on a mission trip with about 15 others and filmed a video about this organization that builds schools. And the thing that really caught me is that when there's not a school in the village that these elementary school kids go to,

they may have to walk two hours each way along a desolate road. And we're talking about cars, strangers, kidnappings, all sorts of things can and do happen. So when there is a school in the very village that these kids live in, there's safety, and there's an education that occurs, and this child can grow up to be a contributor to their society and their culture when they are kept safe by having a school right there where they live, just a few minutes walk. And so we went to go serve the folks in Sierra Leone and tell the stories of what this organization is doing, and I was there for about two weeks. I came back and worked on the editing of this video to create about a seven-minute piece, the annual fundraising event for the Bridge of Hope. And I was sat next to this tall gentleman named Ernie getting himself around with a cane. And I wondered, well, I wonder why, with this arranged seating, why I'm sitting right next to Ernie,

I wonder if we have something uncommon here. Well, it turns out Ernie had chosen to fund my trip there. He personally, without ever having met me, he funded my trip. And I had learned that. And it was at that moment that my heart just melted. And I thought, here's a man that I've never met before. He funded my trip to go tell this story of this organization that is helping lives over there on the other side of the world. And he just chose to do it.

Now, he couldn't go boots on the ground to Sierra Leone himself because of his age and where he was physically. but he certainly could send other people to do so. Now, the video eventually played, and the time came to donate money for anybody that was there. And he leans over to me, and he says, Scott, that's the first time I've seen that video. And he said, on the car ride here with my wife, we had already decided on the amount we were going to give.

And he said, don't tell her, but I just doubled it. And it was the greatest sense of business. joy and elation I've ever seen in a human being. And he could do that because he had multiplied his money and he had some to put towards purpose. And he could because there was available resources. And that has been life changing for me to have experience that in this elderly gentleman. And I just felt like he was my uncle at that point. I felt like he was related just within an hour of knowing this man. And we were already so connected. Now that's following a people-based why. Multiply money, sure, if we have another $1,000 in the 401k account,

that's great. If we paid down debt, that's great. These are all wonderful things. And we want to take care of our own selves and our own families. But if we can get to that point of going beyond that, that's something else. It's like getting in the carpool lane where there are miracles happening all the time. If we choose to put ourselves there, that's where these things are being experienced. and money is only one of the ways where these miracles can happen. But if we put ourselves to the task of multiplying money, there's so much good that can be done out there. Right. The best type of impulse spending is spontaneous giving.

I love it. I love it. Yes. That's great. Right? Because that's what Ernie did, that spontaneous giving. That's exactly what he did. I mean, we can be at the cash register and pick up a pack of bubble gum we weren't planning on and do that spontaneous spending.

but in his case he gave in that way and it impacted so many of us. I called the organization back and I told them that story that that had happened and they were so encouraged because they knew what was going on. They knew he had paid for my trip to go and they had sat him right next to me. They knew what they were doing. So I gave him that feedback and I just said, I think he changed my life by having done that. Thank you. Wow.

Back in 2018, I encouraged the Afford Anything community to donate. My goal was to have the Afford Anything community donate enough money to build a well in another country through charity water. My goal for that calendar year was can just the Afford Anything community, us as Afford Anything, can we put together enough money? I think it was somewhere around $20,000. Can we put together enough money that we ourselves solely sponsor the construction of one water project? and we didn't know specifically what the water project would be, and we didn't know where it would be. The way Charity Water Works is once the money is collected,

then they'll talk to their in-country partners, and they'll look at the needs, and they'll assess that point in time, and then they'll let us know where it's going and specifically what it's going to be used for. So for most of 2018, it was bumping along. You know, we were collecting a few hundred dollars in donations every week, but there was no massive inflection point until I've never met this person,

but one member of this community announced that he would match all donations. So the money would double. It doubled. Anyone who, right? There it is again. And so then what I told the Afford Anything community, I was like, hey, do you want to know the easiest risk-free way to double your money? Give it to charity water.

give it to this fundraising campaign that we're doing with Charity Water, and your money is instantly going to double. And the moment that that happened, boom, we funded the project. Just like that. And it turned out that that money was spent on a well built in Sierra Leone. No kidding. Yeah. Fantastic.

Yeah. Oh, wow. Wow, I love hearing that. Yeah. This is all aligning. I'll go visit it in a few weeks. So, yeah, on the topic of Sierra Leone, and on the topic of doubling money.

Yeah. It's incredible. And I guess for the beginners, again, because this is a beginner's episode, what we're really highlighting here is the joy, that why, which really drives the purpose of getting good with money. Yeah, it's having that big enough why. You know, another thing that might want to take us off track is, once we build wealth, because that's what can happen when we're multiplying it,

is that there can be other things that take us off track. It could be a 401k loan, right, taking out a loan from a 401k. It could be home equity loan, things like that. Not that these are things are terrible in themselves, but if they're not right for us, they can take us off track immediately. But if we have that big enough why, it can keep us on the straight and narrow because I'm going to say it's a hard path to build wealth and be purposeful with it and to wait for that multiplying to happen,

especially because most of us who are investing, the common person, is going to be able to tap into the resources at 59 and a half. And so, boy, what happens then? Are we going on a spending spree or what's happening? But to keep that people-based why in place there, when those resources are finally available to us, it can keep us on track to the very, very end. Right.

Now, many beginners feel analysis paralysis because the world of money seems so complicated. We've talked so far about compound interest we've talked about purpose. We've really talked about the why behind it. Compound interest is the mathematical why and purpose is the spiritual why. But beyond the why, there's the logistics of how. And that's where it can feel for a beginner very overwhelming because all of a sudden you're getting into the world of asset allocation and you're trying to choose investments and you're wondering if you should invest in crypto, right? And when a person is just

starting out and they don't quote unquote know much about money, which is something that I hear a lot from the beginners in this community, that how can feel very overwhelming. Do you have any tips for how to simplify the how? I love that question. Okay, question. Do you know how to solve a Rubik's cube? My grandfather does. Well, he passed away, but my grandfather, while he was alive, could solve a rubrics cube in a minute or two. Yeah. That's wonderful. Wonderful. Four percent of the population knows how to solve a Rubis cube, even though it's one of the most proliferous playthings in the world and one of the most sold toys. So Erno Rubik, a Hungarian architect, he developed a toy and it just blew up. So there's six sides, 54 squares. And all the combinations on there, 43 quintillion possible combinations of those colors. Now that's a couple sets of zeros and commas beyond a trillion. I was going to say, how many is a quintillion? 43 quintillion.

It's 43 quintillion. Quintillion? Yeah, yeah. Go ahead and practice saying that. That doesn't apply much to the world of finances just yet. But we're talking about a Rubik's cube here. And so I have a lot of Rubik's cubes inside my house, small ones, pyramid-shaped ones, ones with nine squares on each side, one, you know, 16 squares.

They're all over the place. And I would pick one up and try to fool with it, try to get one side. and then put it down and have no idea what I was doing. I felt like an imposter. I felt like it wasn't for me. I felt like it had to be someone that was more technical than me. I didn't belong. And so decades past, the rubies cubes are strewn throughout the house, unsolved.

And one day, my son comes up to me and he says, Dad, I want to figure this out. He says, will you do this with me? And at that point, I thought, okay, if I agree to this, either he's going to figure it out, and I'm not, and I'm going to just feel totally diminished as a parent, which is probably rightly so. Or he may ask questions and I have no idea how to go about doing this.

Well, what we did was we looked up one way, out of all the varieties of ways of getting this figured out. And we looked up one way. It wasn't going to be the fastest. So it wasn't going to be like a speedcuber who can do this in 10 seconds or less. But it wasn't going to be where we figured it out on our own and had to track every single move that we made. We were going to watch someone that had already figured out for us

in the simplest way for us to succeed. The simplest way. Not the most complex, not one that was going to take years and years of practice. One where we could put in, say, the least amount of time and still get it figured out. And so we did. Robbie Gonzalez of Wired Magazine had a YouTube video out that he had put out on how to solve this.

And to put it simply, you figure out the bottom layer, and then you figure out the middle layer and then you figure out the top layer. And I never knew that. I had no idea. But in the way that he describes it, it makes it so that someone like me

who had gone, walked by this toy for decades, now could figure it out. And we did. We did figure it out. And there's some algorithms that you do need to figure out later in the process. One is for earth,

front up right, right up front. And there's we're er, right, up, right, up, right, up, right. And there's these algorithms that you need to memorize, which I love. But that's all part of the process. You learn those later because there's simple steps in the beginning. The simple steps are one, create the yellow daisy, yellow square in the middle, white on the side. It's very easy to do. And that's coming back to finances now

is that we don't need to learn every single way that finances can be done. finances, just like that 43 quintillion number, finances can have just a limitless number. Let's say if there was, like we mentioned, various ages to start work at. Did we start work at 16, 17, 18, 19? Did we start at 40? There could be 20 options there. There could be as far as how long a career is.

Well, we could say it was 20 years. We could say it's 50 years. There's so many varieties there. What's your rate of return? Well, we could say it's 3%. We could say it's 10%. and everything in between, and that could end up with hundreds of thousands of possibilities, just like a Rubik's cube.

But if we choose one way and we cut through all the constantly roving variables, and we say, we're going to go one way, the most common, age 22, 40-year career, 7.2% interest rate, we can now understand it. We can ask money to freeze. Now, our situation may be different from that, but as long as we have a rule of thumb to start with, we can learn and we can add complexity later. But the point is, learn simple enough so that we can get started. So that by the time we're ready for complexity, we've been doing it 10 or 20 years and we didn't miss out on the power of 16. Right. And so that's why for a beginner,

you create the framework of let's just assume that you're starting at 22, that you're working a 40-year career, and that your money over the long term is going to make 7.2.2.000. percent as a rate of return. Let's just start with that set of assumptions so that you understand that every dollar that you invest at age 22 will multiply 16x. Every dollar you invest at 32 multiplies 8x. Every dollar you invest at 42 multiplies 4x. And the corollary to that is every decade of life, your ability to multiply your money gets cut in half. Yes. Enough to take action. The simplest understanding so that while we have that multiplying power when we're young, that we go ahead and take that action with confidence, with gusto, more than we would otherwise,

because we have that understanding. And here's the thing is that when we went into this, and I told my wife, okay, we're going to say for my son's college education, okay, I shouldn't say my son, our son. Yeah. Okay, Sue, our son. And I got to the point where I said, all right, and we can stop now. And she said, what do you mean? Don't we need to keep putting money into this account until he's attending college? and I said, no, we can stop now because it's going to double.

And it certainly has. So he's ready to go to college right now if you wanted to. But you see, it allowed me the ability to plan. I could front load his college education and stop. The money would double over 10 years. And during that time, we're moving on to the next thing. For some folks, dollar cost averaging is hard to understand. We might need a calculator.

We might need a financial advisor to tell us what's happening. But when we think of one input, $1 in, $16 later, it is now understandable. We don't need to know all the rest. We need to know enough to take the action. And 10 years later, 20 years later, we are smiling by the action that we took earlier. It's all about taking that confident action early. And the funniest thing about this whole college education thing is now my wife has come back and said, let's pour this money into a custodial account, you know, separate money into a custodial account

for our son. I'm like, whoa, whoa, whoa, are you sure that seems like a lot? So now she's more overboard than I am because she believes in this and she's seen at work. Right. So don't worry about the complexity of it. You can deal with it later. If you're a beginner, the most important thing is just get started. That is absolutely right. And you can invite in complexity later, 10 years later, 20 years later, I myself was middle age when I started to become familiar with finances. And I am very thankful that my father told me, invest in this 401k plan. There's free money in it. And that's what he told me.

And so I did. Timidly, I wish I had done more. But because he did say that and I did do that, I am pleased by what I'm seeing now 20 years later. So, yeah. Well, thank you for spending this time with us. Where can people find you if they'd like to learn more? Financialepiphany.com. Perfect.

And we will link to that in the show notes. Thank you, Scott. Thank you, Paula. So good to be here. Thank you, Scott. Since this is a beginner's episode, I wanted to round out this wrap up with more tactical, actionable, applicable tips for beginners.

Here's a thing. Many years ago, I asked the subscribers to my newsletter of Ford Anything.com slash newsletter. I asked two questions. Number one, what's your wildest dream? And number two, what's keeping you from getting there? And after reading through literally thousands of responses, I heard one theme emerge.

And that theme was, I don't know how to invest. And I'm afraid of making expensive mistakes. So in the conclusion to today's episode, let's tackle that. Because unfortunately, most of us don't learn about investing in school. And that's why for every beginner who is listening to this, first, I want to applaud you because you're taking the initiative to learn.

You are self-motivated. You're seeking out information. You could be tuning into celebrity gossip right now, but you're here with us instead. And that deserves a round of applause. So if you are just getting started and you want to invest but you're not sure what to do and you don't want to F it up, I'm going to do two things right now. First, I'm going to give you a broad highlight of the only five things you need to know, and then I'm going to deep dive to give you a profound understanding of why. As a beginner, there are only five things that you need to know in order to get started.

Number one, invest in index funds. Number two, diversify those index funds, which means, for example, you might have one stock fund that represents your country, one stock fund that represents the rest of the world, and one fund that represents your country's bond market. We can dive more into those choices later, but right now, the only thing you need to know is that you want to diversify between different types of broad index funds. You're not picking individual stocks. You're buying broad index funds. All right, that's point number two. Point number three, hold these in tax-advantaged accounts like your 401k, your IRA, or your HSA. Switch to taxable accounts if you need to access the funds within the next five to ten years, but before retirement, or if you've exhausted all of your tax-advantaged options.

So that's point number three. Point four. Keep investing regularly, whether that's weekly, it's bi-weekly, it's monthly, keep investing with every weekly, it's monthly, keep investing with every single paycheck, regardless of whether the market is up or down. And number five, feel neither excited about the highs nor depressed about the lows. Trust the process. If you're a beginner, that's what you need to know in order to get started. Now let's talk tactically about your precise order of operations. Step one, get your full employer match. If your employer offers a retirement plan, like a 401k, a 403B, or a simple IRA

that has a company match, then contribute as much as possible to get the maximum match. And I cannot stress that enough. If you walk away with just one takeaway, it is get your full company match. To be clear, I'm not referring to exercising your company stock options. That's a different topic. I'm referring to the matching contribution in your retirement account. And if right now you're thinking, what, huh, what's that? Okay, let's assume that you earn $50,000 a year. And your employer gives you a dollar-for-dollar company match up to a 5% maximum on 401K contributions. Well, 5% of your salary is $2,500.

And so what that means is that if you put $2,500 into a company 401K, your employer will also contribute another 2,500. And that means you'll have a total of 5,000 in your 401k, even though only 2,500 of it came out of your own pocket. This is the only guaranteed return, quote unquote, in the world of investing. And that's why it's essential that you get this, even if you have debt, because this is a question that I hear a lot from beginners. Oh, but what if I have credit card debt? What if I have student loans? Get your company match. Yes, even if you have credit card debt, because I guarantee you that the interest rate on your debt is not more than 50%. So even if your employer offers, let's say, 50 cents for every dollar that you contribute, that's still a better deal than paying off that credit card.

your interest rate, even on the world's worst credit card, is not 50%. Now, there are, I want to acknowledge, there are sometimes non-financial reasons for prioritizing that debt. Maybe you'll get a lot of emotional satisfaction that comes from paying it off. Maybe there's a behavioral element where you just, you hate the fact that you have it, you want to get rid of it as fast as possible. I applaud that. but mathematically speaking, assuming that your employer offers at least 50 cents on the dollar, mathematically speaking, you are better off getting the full company match. Now, here's another objection that I often hear from beginners.

People will say, well, I don't trust the stock market, so I don't want to put money into my 401k. Your 401k and the stock market are not the same thing. your 401k is an account and stocks are one type of asset. Think of it like this. An account is a vessel. And when I say a vessel, think of a bar, right? You go to a bar, you've got a pint glass, you've got a martini glass, you've got a coffee mug, you've got a teacup. I don't know why a bar would stock a teacup.

But roll with me here for a second, right? You pint glass, martini glass, shot glass, coffee mug, teacup, champagne, fernic. flute, these are all different types of vessels. And that's what a 401k or a 403B or a simple IRA or a taxable brokerage account, that's what those are. Those are just different structures of vessels, just like a champagne flute is a different type of vessel than a coffee mug. Those vessels are different from the assets themselves. The assets themselves are the champagne, the coffee, the beer, the vodka, the tea. Now, it's absolutely true that there are certain types of assets that commonly go into certain types of vessels. Tea typically goes in a teacup. Champagne typically goes in a champagne flute.

Beer typically goes in a pint glass, but there's no rule requiring that. You're welcome to fill your coffee mug with tequila if that's what you want to do. That's why it makes no sense to say, well, I don't trust this stock market and therefore I don't want to contribute to my 401k. You can always contribute to your 401k and then fill it with tequila, which is another way of saying, don't conflate the account with the asset. Okay, now speaking of assets, another question that I commonly get from beginners is, should I pick individual stocks? I was actually talking to someone last night who was like, oh, learning about the stock market feels like such an uphill. battle because I need to learn how to evaluate these stocks. How do I evaluate Tesla? How do I evaluate

Apple or Meadow or Berkshire Hathaway? Well, the good news is you don't have to because your best bet are low-fee index funds. Index funds track the overall broad market, which means they're designed to create results that are as good as the overall economy. No better and no worse. Now, historically over the long term, the overall U.S. economy has produced returns of around 8, 9%. Here's the cool thing about broad market index funds. You don't have to pick stocks and you don't even have to pick mutual funds. You don't have to pick what fund is going to do better than what other fund. You just go with these big, broad index funds, like something that tracks the total stock market,

something that tracks the total bond market, something that tracks total international, and something that tracks small caps. By the way, you're going to hear people throw around the word cap. Cap technically is short for capitalization, which means how much money a company has. So anytime you hear somebody say small cap, what they're really saying are small companies. If somebody says large cap, what they really mean are large companies. Midcap means mid-sized companies. So if you have a couple of index funds that track these various slivers of the market, you've got a good mix. And what we know statistically is that most people are better off aligning themselves with the market rather than trying to beat it.

Because often fund managers who attempt to beat the market, A, they collect high fees. B, they incur a lot of drag, meaning costs associated with all of that trading. Oh, and C, you've got to pay these fees regardless of whether or not the fund outperforms, and often it underperforms. And by outperform and underperform, what we mean is does better or does worse than the overall market. The great thing about index funds is that you don't have these exorbitant fees, and you don't have the risk of picking individual stocks or having to choose actively managed mutual fund managers. So if you're wondering, where do you go to do all of this? All right, you know those big name companies like Vanguard, Fidelity, Schwab? You hear those names get thrown around a lot?

Well, those are called brokerages. And brokerages hold your accounts. And remember, we said earlier that accounts are vessels. They're similar to a coffee mug, a shot glass, a champagne flute. Think of a brokerage like a big warehouse that stores all of your coffee. coffee mugs and champagne flutes and shot glasses. Okay, so that was a long step one. All right, but step one was to get that full employer match.

Step two is to invest in a Roth IRA. So a Roth IRA is a certain type of coffee mug. And remember, you're going to have to store this coffee mug in a warehouse, which is a brokerage, like Vanguard or Schwab or Fidelity. The reason, by the way, that I keep bringing up those three is because they are referred to as the big three discount brokerages, meaning the fees at all three of those are rock bottom low. All three are fantastic options. Vanguard in particular is what's known as a consumer co-op, meaning that if you open an account there, you are, congratulations, a part owner of Vanguard.

So you can add that to your dating profile. So open a Roth IRA, put it in one of these three. Now, if you make so much money that you cannot contribute to a Roth IRA, then you're going to have to do a little fancy tap dance in which first you put money into a traditional IRA, and then you move that money from the traditional IRA to the Roth IRA. That's referred to as a backdoor Roth contribution. Now, if you're wondering, hold on, what's the difference between the two? In a traditional IRA, you get a tax deduction this year, but all of your dividends and your capital gains,

all of the growth in that account, will be taxed in the future after that money has grown and grown and grown and grown. By contrast, if you have a Roth IRA account or any other type of Roth account, you do pay taxes on those contributions this year, but your capital gains and your dividends are deliciously tax-free for the rest of your life.

So the great-grandparent version of yourself who is enjoying all of that growth will be able to enjoy that growth tax-free. Now, if you know that your income is definitely going to plummet in the very near future, then you might want to contribute to a traditional account and convert it to a Roth later. There's some kind of fancier games that we can play, but since this is a beginner episode, let's just keep it simple and say, stick with the Roth account unless there is a really compelling reason not to. In other words, default into the Roth unless you have a strong argument as to why you wouldn't. Let's just go over what we've discussed. Step one, we said max out your employer match. Step two, contribute to a Roth IRA.

Now, step three, hack your HSA, which means check to see if your health insurance policy is HSA-compatible. and you'll know because the policy description is going to say something really obvious, like HSA, question mark, yes. It's pretty unambiguous in the way that the plan information is written. But still, if you're not sure, call human resources if you have an employer that's big enough to have an HR department, or call your plan directly if you work for a very small business or if you're self-employed. If your plan is HSA compatible, then open an HSA account. HSA stands for health savings account. Open an HSA, and if you have the money to do so, max out your contributions.

This is my favorite way to win the HSA game. So max out the HSA, which is tax deferred, going in. Then you get to grow that money tax deferred. So you just sit on that money for years and years and years. Keep it invested in index funds like we talked about. let it grow tax deferred for years and years and years. If you have the money to do so, don't touch that money for your qualified medical expenses.

Just pay out of pocket for your medical bills. Spend regular old pocket money on your medical bills. If you're able to have the budget to do that, save the receipts. I stick mine in a Dropbox folder that's labeled HSA. Forget that the receipts exist because if you can retire without any, ever reimbursing yourself. That's actually the goal. You've saved the receipts just in case you

ever want to reimburse yourself out of the account, but ideally don't. You want to save the receipts so that the option is there just in case you're ever in a jam and you need the money. But ideally, don't reimburse yourself. Let that HSA grow and get to retirement age while keeping money inside of that HSA account. Now, why are we? doing this? It's because the HSA functions as essentially a supplemental retirement account, but you have the flexibility, if you've saved your receipts for qualified medical expenses, you have the flexibility to tap it if you need to. Oh, and when you do tap it, this is tax-free money. So you get a triple tax advantage. The money is tax-deferred going into the account. It's

tax-deferred growth while it's inside the account, and it's tax-free money when you're spending it on qualified medical expenses, which you don't have to do at the time that you incur the expense. You can just let it grow tax-free and then reimburse yourself with tax-free money whenever you want. So you effectively have an extra IRA account through the HSA, but it's actually even better than a normal IRA account, right? Tax deferred going in, tax-free coming out, holds the liquidity of a medical emergency fund, and for any amount that you don't spend on medical expenses, you get penalty-free withdrawals after you reach retirement age. So if you have access to an HSA account, absolutely use it. Now, that being said, don't get a high-deductible health insurance policy

just for the sake of HSA eligibility. If you have the opportunity to get some awesome bells and whistles, very, very low deductible health insurance policy, if you have the opportunity to get that through your employer at a very, very low cost to you, yeah, absolutely get that. If I worked for a major employer that offered premium Cadillac health insurance that was not HSA eligible, I would absolutely take that. So to be clear, this is an opportunity.

for those of us who are stuck with high deductible health insurance policies, but it is not a reason to get a high deductible health insurance policy. All right. Now, for beginners, if I just made your head spin with that, don't worry. That was me getting a little bit excited and going down nerd rabbit hole. But the long and short of it is step three, max out your HSA if you are eligible to have one. I also want to make one important distinction. An HSA is a health savings account, and that's what we've been talking about. There's also a different type of account. It's called the FSA.

It's the flex spending account. A spending account is not for savings. The spending account is for spending, which is why that account is use it or lose it. You have to use any money that's inside of your spending account within a particular time frame, and if you don't, it literally evaporates. So you cannot gamify the flex spending account. please do not confuse an HSA with an FSA. I know they both have the letters S-A at the end.

There are three-letter acronyms in which the second and third letter are both S and A, and so people often confuse them. But they are in no way similar. One is a savings account and the other is a spending account. Okay, that's the deal with the HSA. Now, step four. Max out your other investments. And here you've got a bunch of choice.

You could decide that you want to max out the rest of your company retirement account. You could decide that you want some flexibility so you put money in a taxable brokerage account. You could decide you want to be a real estate investor. So you start saving for a down payment on a buy-and-hold rental property. Heck, you could decide that you want to start your own small business. You want to start a side hustle and you start putting aside seed money for that so that you can bootstrap your own business. Or heck, in the spirit of our recent former podcast guest, Cody Sanchez, you could even buy a bit. I mean, if we're really getting advanced here, you could even buy a business.

Go buy a porta potty. Be number one at number two. This is the part where investing really gets to be a lot of fun because it's a big choose-your-own-adventure-own-adventure-go-all-adventure books have never been referred to as novels before, but that's how we roll here. Actually, and as I'm talking, I just realized Gen Z might not know what a choose-your-own-adventure book is. Okay. Before there was TikTok, you know what? Just never mind. Point is, the world is yours and all of these paths are open to you because you have done the fundamentals first.

You have gotten your full employer match. You have contributed to your Roth IRA. you have maxed out your HSA. You're in broad market index funds, which are diversified among a few asset classes. And by the way, we're talking specifically in this episode about investing. But the fundamentals of good, healthy personal finance hygiene you also have in place. You have no high interest debt. You have an emergency fund, meaning some money set aside for a rainy day. You're spending. less than you earn. And with all of those things in place, this is when it becomes a choose your own adventure. And by the way, for those of you who are not familiar with those books,

all right, so I just Googled it. Over 250 million Choose Your Own Adventure books were printed in 38 languages, making it the fourth best-selling children's book series of all time. Discontinued in 1999. But relaunched in 2003 by another company that's trying to breathe life into it, See, this is what you can do when you have the money to invest. You can buy intellectual property. So all of that is to say, if you are a beginner, just get started. Don't let perfect be the enemy of good.

Get in the market and stay there and keep buying. And over time, you will learn more, you will iterate, you will learn how to optimize. but think of it like going to the gym. Doing literally anything at the gym is better than being sedentary. And over time, sure, you'll learn more about how to optimize your workouts. You'll read the arguments about low-impact steady state versus high-intensity interval training.

You'll learn about progressive overload, blah, blah, blah. But in the beginning, if you can just not be sedentary, that alone is a major victory because doing something is better than doing nothing. And the issue is that if beginners get overwhelmed, that overwhelm often leads to inaction. It leads to doing nothing. And that's the worst thing you can do. Now, obviously, you don't want to push it too far and get injured, which in finance would be the equivalent of making super risky speculative bets that could go to zero. But that's why you stick with

broad market index funds. That's why you just get a total U.S. stock market index fund. Like VTSAX is a great way to get started. And then later you can learn about the efficient frontier. Later you can iterate from there. For the beginners in this audience, I hope that this was helpful. Let me know what questions you have. Best way to let me know, subscribe to the newsletter and then just hit reply to any email that I send. Affordainthing.com slash newsletter. Totally free. Zero cost. Thank you so much for being part of this community, for being an afforder. We're so glad to have so many beginners in our midst. This is the Afford Anything podcast. My name's Paula Pant, and I will meet you in the next episode.