Modern Wisdom - #462 - Nick Maggiulli - The Best Way To Build Your Personal Wealth

Episode Date: April 18, 2022

Nick Maggiulli is the Chief Operating Officer for Ritholtz Wealth Management and an expert in personal finance using data analysis. Saving money and building wealth are some of the most popular content on the internet. But what are the absolute best ways to maximise your fortune? Nick has broken down the complex world of personal finance to find out what the data says about different strategies. Expect to learn why earning more is better than spending less, why buying the dip is a losing strategy, the easiest way to invest in the stock market, how to spend money guilt-free, why almost everyone has a backward retirement strategy, how to tell when you should sell, what the Vanderbilt's lost fortune can teach us about spending money and much more... Sponsors: Join the Modern Wisdom Community to connect with me & other listeners - https://modernwisdom.locals.com/ Get 30% discount on your at-home testosterone test at https://trylgc.com/modern (use code: MODERN30) Get perfect teeth 70% cheaper than other invisible aligners from DW Aligners at http://dwaligners.co.uk/modernwisdom (use code MODERN10) Get 5 Free Travel Packs, Free Liquid Vitamin D and Free Shipping from Athletic Greens at https://athleticgreens.com/modernwisdom (discount automatically applied) Extra Stuff: Buy Just Keep Buying - https://amzn.to/3OcdXID Check out Nick's blog - http://ofdollarsanddata.com/  Get my free Reading List of 100 books to read before you die → https://chriswillx.com/books/ To support me on Patreon (thank you): https://www.patreon.com/modernwisdom - Get in touch. Instagram: https://www.instagram.com/chriswillx Twitter: https://www.twitter.com/chriswillx YouTube: https://www.youtube.com/modernwisdompodcast Email: https://chriswillx.com/contact/  Learn more about your ad choices. Visit megaphone.fm/adchoices

Hello everybody, welcome back to the show. My guest today is Nick Majuli, he's the Chief Operating Officer for Ritzholtz Wealth Management and an expert in personal finance using data analysis. Saving money and building wealth are some of the most popular content on the internet, but what are the absolute best ways to maximise your fortune? Nick has broken down the complex world of personal finance to find out what the data actually says about different strategies. Expect to learn why earning more is better than spending less, why buying the dip is a

losing strategy, the easiest way to invest in the stock market, how to spend money guilt-free, why almost everyone has a backwards retirement strategy, how to tell when you should sell, what the Vanderbilt's lost fortune can teach us about spending money and much more. This is an absolutely awesome episode. I love when a complex, highly contested world gets broken down by somebody that just has tons of data and experience and Nick has done this. This is the sort of episode that you should come back to any time that you are trying to make

some sort of financial investing or saving decision. Just come back to this and think about what did Nick say? What would Nick do? W-W-N-D, get it on a T-shirt or something. Anyway, enjoy this one and share it with a friend if you think that they suck at earning money or spending money or saving money. But now, please give it up

for Nick Medulli. The world of personal finance, I find quite interesting. It's similar to diet in that everybody needs to eat. Similarly, everybody needs to have money and earn money. And yet, it seems like there is no widely accepted wisdom about the single best way to construct your financial life. I understand people have different requirements, but it does kind of surprise me a little bit that it's still so contested,

even though everybody should have an opinion on it. Yeah, definitely, I think it's contested for a host of reasons because I really don't think there's like one right way to do it. And I kind of, you know, I've discussed this a little bit like, there's that, I think that line from Anna Curranina, which is like, you know, all happy families are the same, but all unhappy families are unhappy in their own way. Well, it's kind of the reverse and wealth management,

which is, or start with like building wealth. Like, there's like only a few ways you can go broke, but there's a lot of different ways you can get rich, right? There's people who got rich in real estate, there's people who got rich buying stocks, individual stocks, you know, index funds, you know, you can name a farmland, whatever. There's a lot of ways people get rich, but everyone goes broke one of a couple of ways. You use the high risk, high spending, or leverage, or some mix of those things there that usually causes it.

So that's kind of how I look at the world. So I think that's why it's contested, because there's real estate people saying, you have to own real estate, you have to do this. And there's stock market, they're saying, no real estate's dumb, I don't want to waste time doing that the hassle of a frozen, the pipe that burst at night. There's always that same tail, right?

And I think they're both wrong. I think there's both, there's pluses and minuses and everyone has their biases and I can get into mine. But I think that's why it's contested. Yeah, you're probably right. What do you think are the biggest myths in personal finance? I've only a couple of times dropped into Fin Twitter, which I didn't

even know as a thing, but I've been CC'd in a couple of times, and it's a complete cesspool. So, yeah, you talked to me about the biggest myths that exist in personal finance. So, I'll just, I'll talk about three of the biggest myths in personal finance. The first one I think is that you can, cutting spending is like a reliable way to build wealth. Now, unless you have really high income and you have really high spending, that's the only way it's going to work. For most people, cutting spending just isn't like a reliable way. And the reason I say that is because you actually look at the data and I was using, you know, data in the United States on, you know, how households spend money, there's not much to cut for a lot of lower income households.

And the fact is the savings rate is positively correlated with income. So as people's incomes go up, their spending does go up, but not as quickly as their income. So that difference is how you save money. It's pretty obvious. So the best way to actually save money in a psychological way is actually to earn money, because you're going to end up out earning your ability to spend. Yes, generally. I mean, of course, everyone been like, well, I know this person who spends all their money will be like, yes, that's the exception. Most people with higher income don't do that.

And I think, and obviously some people are going to hear them say, well, that's very obvious to me. I'm like, yes, that's the obvious point, but there's a lot of people. I mean, there's still a lot of personal finance gurus that say you need to cut your way you get rid of your law, Tazee, and you stop doing this and that. And I think anyone who's looked at the data will see obviously, it's clear that incomes go up with savings rate. Savings rate is positively correlated with income.

The higher your income is, generally, the higher your savings rate. That's like been empirically proven across a lot of studies in a lot of ways. So that's the first one I'll talk about. The second one I think is more of an investing question, which is like, there's this idea of like, oh, I'm waiting to buy the dip.

I'm just gonna save cash until I buy the dip, right? And I think this one's a little bit more difficult to understand, but I think it's a sub-par strategy because generally, most equity markets over time have gone up into the right over the long term. So by sitting in cash, you're usually going to lose out because you're waiting for that dip. And by the time that dip occurs, you're now buying at a higher average price. And so like, imagine the price is a hundred, you're like, okay, I'm going to wait until there's a 20% dip that I'm going to buy. Now the price goes to 200, right? And now let's say there's a 20% dip, so 20% of 240, so 200 minus 40 is 160. So it goes

from 100 to 200, it goes down to 160. Now you buy, you're like, wow, I bought this dip, I'm so smart. But it's like, you just bought 60% higher than what you could have bought You know before now it's it's usually not that drastic, but imagine that on a much smaller scale Right, and so that's that's why you know waiting to buy the dip doesn't usually work and and behaviorally It's really tough because while the market's dipping. It's the time when you're gonna be least enthusiastic to buy You're not like oh my gosh, you know March 2020 if you were like oh wait This is a deal and then like you bought and then it's like oh wait It went lower and lower and lower and then you're, oh my gosh, you know, March 2020, if you were like, oh, wait, this is a deal. And then like, you bought and then it's like, oh, wait, it went lower and lower and lower.

And then you're like, oh my gosh, I didn't get a deal after all. So you're gonna beat yourself up. So that's another thing. And the third piece of that is like, even if you win now, what you're gonna think you're a genius and then later you're gonna hold cash and the dip's not gonna come

because those dip big dips are rare and then you're gonna miss out. So I think that's the general course of history. And so that's another myth which I would like to smash. And let's just do it. I usually talk about Falling K, but I know, like, I knew you have probably more global audience. So it's not discussed for on K's and like stuff in the US. The third big myth I think is out there is that everyone says like debt is bad.

There's a lot of people that think debt is bad. I think debt is can be good or bad, depends on how you use it. And depends on kind of your, you know, your what's going on your financial situation. So the thing I like to say is debt is best for people who don't need it. If you don't need debt, you can use debt really well. For example, I'll use a very extreme example, a lot of the super rich like Elon Musk and people like that, they use debt all the time.

It's like, how? Because they take their assets, they give them up as like collateral and then they borrow against it because rates are so low. So they end up not having to sell anything, sell down their equity, have to pay taxes. There's a lot of benefits to that when the after tax yield on selling your capital gains and everything is higher than what you would get from just paying the interest rate. So I think there's a lot of ways people can use debt in a smart way. And I just think you have to, if you don't really need it, then it's really useful to you.

It's the kind of one of these ironic things, you know, like rich people get paid a higher interest rate because they're more money in the bank than the poor people. All right, it's like, it's very weird how that is, but that's just like a general rule of life. And that's the same thing with with debt as well. Yeah. So you can three, three myths. Would you say that people that are highly leveraged, if they've got a property portfolio, whatever 25% loan to value, is that the same thing? Would you consider that being like a smart use of debt, so to speak?

Because I've leveraged up to my eyeballs when it comes to the property portfolio that I've got in the UK, but all of those are positive cash generating machines. They're all sitting at a good interest on emorgge, et cetera, et cetera. Is that another way to look at it? Yeah, I think I think it's how you have to look at it.

It's like, how much, yeah, it's debt to leverage ratios matter. That matters a lot. And I think in terms of leverage, whether it depends how you're using your leverage and everything, but I think the leverage thing I like to look at is Warren Buffett never went over 1.5 to 1. And that's like, he was a stock investor, obviously. He wasn't buying property, but if Warren Buffett

never took more than 50% above his cap loan leverage, then you definitely shouldn't. It's about how much you do it, it's how much and how much you want to crank that up. I think that's the key. Obviously, there are probably certain cases where if there was some crazy local event that happen to hit all your properties in a way, there are cases where you can still get wiped out, but they're probably very, very, very rare and very unlikely. They have to be almost world-ending, and in those cases, your investment portfolio doesn't matter.

So that's another example. There's bigger problems. Yeah, there's bigger problems. If this stock market does go to zero, if the S&P pulls back by 80%, you've got concerns about people fighting in the streets and Mad Max going on outside. So yeah, I understand. All right, so let's let's begin. What I like about the new book that you've just released is that you break up personal finance into sort of its two components like the saving slash

earning and then the investing, right? So income and the output, I guess, on the other side. So how do people know which one they're supposed to focus on first? Yeah. So in the first chapter of the book, I talk about something called the Save Invest Continuum. And everyone's on this continuum that we're on on the planet. You just have to figure out, you just need two numbers and you can figure this out. First number is how much could you save in the next year, assuming it's a positive number, right? It's negative. That's the way we have all sorts of other issues there. But let's assume you could save like, I don't know, thousand bucks, 10,000 bucks, whatever bucks whatever ten thousand pounds in the next year

That's your first number your second number is how much can your investments earn you in the next year, right? So the example I always give is let's see you add 20,000 pounds or something and you're gonna 5% on that you know So that's a thousand pounds a year. So you have 10,000 pounds you could save you know in a year you have a thousand pounds You can earn right so that's 10 to one Whatever one's bigger that's where you need to focus. And so what what do I mean? So in this case, if you could save 10,000 pounds a year, but your income can only, or your investments can only earn you a thousand, you need to find ways to keep get that money and get it invested. So you raise the other number. You want to raise the investment number as much as you can until it's like almost equal to what you can save, right?

Ideally, and over time, you should see this happen with the growth in the market. Like when I first started this, I had almost no investment income, right? But I could save a lot more money. And over time I basically started saving. And now I'm at the point where I basically can save as much as my portfolio can earn me in a good year. Assuming there's a good year.

Obviously if there's a down year, it's not gonna matter. But if there's a really bad down year, I couldn't save my way out of it. Like it would take maybe two years of income of savings to get my way out of a bad year or something like, assuming I sold, I'm not going to sell, but that's assuming I sold, right? And I'd like make up with that cash, it would take me a few years. So that's a simple example. You just see where am I focusing? And over time,

what you should see happen is you should move from the savings you can save more to over time your investments should be able to earn more than you can save, right? And a simple example does this, right? Imagine you're 23 years old, you have a thousand pounds in your brokerage account or whatever. Even a 10% return, that's 100 pounds. That's nothing. You can go spend that out at the pub or whatever very easily. But now imagine you have 10 million pounds. Even a 10% drop in your portfolio is a million pounds.

It's like a lot of money. You're not going to be able to save, unless you have a really, really high income, you're not going to be able to save a million pounds in here, right? So those are extreme examples, but they show like in certain cases, investing is everything, and in other cases, all about what you can save. And so usually that's correlated with age too.

So that's the thing to think about there. What does that look like practically? When you're saying you need to focus on saving, or you need to focus on investing, how does that manifest in people's lives? Yeah, so for example, I'll give when I was 23, I was spending way too much time on my investments. What I mean by that, I had spread sheets about, oh, here's my allocation,

here's, I'm going to optimize this, I know it should be 5%, 100%, 10%. But I'm caring about all that, what I should have been doing was building my skills, networking more with my career, doing all that. What I should have been doing was building my skills, you know, Networking more with my career doing all that to focus on the income aspects of my financial life, not the investments because I didn't have that much money to invest, right? And so what does that mean on the opposite side? Let's say you're 65 years old or you're retired. You can't really save anymore. All you have to care about is like, what am I doing my investments? I need to care about taxes. I need to care about tax yield. There's all sorts of things that when you're 22, it doesn't matter.

Like, oh, should I do like a Roth IRA or a normal IRA? Should I put it into 20% bonds or 10% bonds? When you're 22, it doesn't matter. It really doesn't. Outside of like a couple lucky people who bought an NFT that went up 10 trillion percent, that's very rare that should not happen again. Those things are incredibly rare.

Like outside of those exceptions, like it's not gonna matter, like your asset allocation's not gonna matter that much. It's gonna matter a lot more when you have a lot more money at stake, basically. So that's what I think about. I say where to focus. I mean, like how much time and energy,

what are you focusing on? Are you caring about taxes? Are you caring about risk? Are you caring about things? That's the investment side. Or are you caring about your career and how you're gonna build income? That's the saving kind of investment side. Or are you caring about your career and how you're gonna build income? That's the saving kind of earning side.

What do you think NFTs and crypto and these huge balloons in individual personal wealth that's been facilitated pretty much exclusively in the last 10 years? I'm sure that you could probably give me an example from history when some stocks gone wild as well, but like ballistic, neat Wall Street bets, sat at home, people that are being made. What do you think that's teaching us about what it means to either be rich or be financially

successful or be wealthy? Because I have to do some concerns about what I think this means sort of on a broader psychological basis for people. So I think if you'd asked me this question in November 2021, it would have been a far more, it would have been a far better question because back then all the tech stops and all the tech stocks in the US were up a lot. Crypto was up a ton right right now at Bitcoin as as of this recording is trading at 40k which is is not half, but a little more than half below where it was, right? It's peak. So you start thinking about all these things.

And if you would ask me that back then, the lesson was, oh, everyone gets rich, but it's a bull market. Now that these things are down 40%, 50%. There's a lot of people who got rich in 2021 that are now seeing those losses in big ways. Now, of course, those people that got into crypto and NFTs and early in 2018, 2019, when all these those people that got into crypto and NFTs and early

in 2018, 2019, when all these things started popping, they're doing very well regardless. I hope it doesn't teach the wrong lesson of like, oh, I'm smart and I did this. And some of these people, I'm not saying you're not smart. I'm just saying you might have gotten lucky. And if you recognize there's some luck in this process, that's what's important. I'm not saying you're not smart. Like, you saw something I didn't, that's true. But does that mean you're going to see every other thing that someone I didn't, that's true. But does that mean you're gonna see every other thing that someone else isn't gonna see? That's the question.

So Nick, just some people saw something that you didn't. Others just fucking meamed their way to multi-millionaire status. Like, don't get me wrong. There are people out there, I have a friend who told me about Ethereum in 2016 when it was $23. And I put about a thousand pounds, maybe two thousand pounds in,

and it went from 23 to 110, and then it had a little pullback, and I was like, right, cool, I'm out, fucking, yes bro, 4X my investment. And that to me still now is like, and it was in each or all as well. So it was, it would have been tax-free because it's just whatever bet spreading or whatever it's called. But the concern that I have, especially around sort of the NFT craze and crypto and stuff like that,

it seems to me that there is a big chunk of people, this isn't everybody, a big chunk of people who do not give a single fuck about the fundamentals, about the technology, about what it can do for people in war-torn countries like the Ukraine who can't send money back to their families, people that are under dictatorial rule that have got whatever financial bureaucracy that's stopping them from doing stuff. That's what they say. It's, how would you say, ruthless capitalist masquerading is good Samaritans. And you go, dude, if it wasn't for the fact

that you can make millions and millions of dollars off this, would you still care? No, you wouldn't. No, you wouldn't. And fuck off if you say that you would. You would not give a single shit. You like the fact that you can sit in a hoodie and meme your way to millions of books.

That's what you like about this. And tell me that it's, again, there is technology that underlies NFTs that may be useful in the future. There is technology that underlies the blockchain that almost certainly probably will be useful in the future. But don't start fucking telling me about why like Cardano and it is this beautiful thing and it's gonna change the whatever

It's like no bro. You're long on you're long in this fucking investment Like you have the highest number of perverse incentives here fuck off Yeah, the skin skins in the game right yeah, even like I'm a big proponent of stocks and low cost stock index funds But even like my you know of my equity portfolio, which is even you know It's only like I think equity is only 70% of what I own, right, in total. The rest is bonds, and I do own some crypto and some art and some other things, right? So that's the rest, but some reach as well.

But so I have the 70%, only half of that's in US stocks, right? Because it's kind of close to like, I basically try to get a market weight cap. So like, my total investment portfolio is like maybe 35% US stocks. So even if I'm like, yeah, you guys should buy like US stocks or whatever, like that's only benefiting me 35% of right. You know, versus someone's like 100% card on I agree with what you say. And yeah, there's obviously those types of perverse actors. And people just do it for the fun there just, it's their momentum, their really momentum traders. That's what they're doing. There's following momentum. And that's fine. That's a strategy that's worked. But it's really tough because when it turns against you, it turns against

you really badly. So, I know the date on that, and I don't recommend that people go out and just try and do that type of stuff. I think it's very difficult to do, especially over the long run. But you're right, I think it could be teaching the wrong lesson to people, but what I say is, as long as people have tried to help and try to tell people

and try to get the message out there, at the end of the day, there's a great book, Devil Take the Hind most, just let it live the trip forward they may. We can try so much, but at some point, you have to be like, hey, end of the day, it's like, you know, there's a great book, Devil Take the Hind most, you know, just let it live trips forward they may, you know, we can, we can try so much, but at some point, you have to be like, hey, like, you made the choice, you know, if someone's lying to somebody, that's one thing, but if you're really trying to like get the message out there,

help people and these people are still like, ah, you're stupid, I know what I'm doing, then, you know, what can I say to you? So yeah, I wouldn't have that, especially yours, and we're both friends with Morgan Housel as well, and I think your investment strategy and his align sort of pretty perfectly. Most of the people that I respect when it comes to growing personal wealth don't talk about sudden out of the blue windfalls that you discovered in the art end of a Reddit thread.

Like that's not where wealth is created. And yet, because the, how do you say, like the cream rises to the top in these sort of big stories that are kind of sexy and cool and a bit sort of heterodox and contrarian and fuck the man, it's GME, bro. Like, I don't get me wrong, dude. I fucking loved that shit last year. I loved that but

The subtext that it teaches people is it's not about having a consistent reliable replicable Investing strategy that you can do for the next X decades of your life It's about timing the meme right. It's about finding the right dog coin that's next going to do whatever the fuck Yeah, my question to those people is like okay It's about finding the right dog kind that's next going to do whatever the fuck. Yeah, and my question to those people is like, okay, some of you are gonna have talent. I'm gonna do this and you can do it, but can you do consistently? I don't know. I'm just gonna say, let's just say we don't know.

But like, is that the best use of your talent? Or should you just like find a low cost, you know, index fund or real estate or whatever you buy and come producing assets, what I talk about the continual purchase of a diverse set of income producing assets. That is my investment philosophy in one phrase. And just spend your time doing something that's more valuable. For you, Chris, that might be posting a podcast for someone else. It might be something else, right? So it's like, if you, instead of doing this right now and like getting out there and

having people that listen to your stuff and learn from you, if you said, you know, I'm just been all my time, GME stuff. It's just silly. It's like you would obviously be better suited doing this I think there's a lot of people out there that are wasting time you know following pursuits that aren't really what's best for them like what really fits their talents and that's that's the real tragedy here in my opinion because obviously some people should be doing it but I mean there's probably too many people chasing this alpha that shouldn't be so okay so getting back to the way that people look at saving, you mentioned

there about the difference between spending less or earning more and there's a good debate around this. There was always something Iki, not Iki, that's the wrong word. There was something that I didn't like about the fire movement, the financial independence retire early, And I think it was a combination of this kind of like overbearing frugality with a complete obsession in young age about finances and the fact that you kind of need to put your nose to the grindstone to get that going. So stripping all of that back and all of the ideology

that's around this sort of stuff, what did the stats say when it comes to spending less versus earning more? Yeah, so we talked about this a little earlier, but basically, when you earn more, that's very highly correlated with savings rates. The more you earn, your spending doesn't generally go up with your higher income. You can look at this across the income quintiles, groups of five, bottom 20 the bottom 20% the 20 to 40 et cetera Right, and you look and you see you say okay here the income

Quintiles here how much of each one of these groups spending you look in each one of those quintiles And you see the spending does increase as it goes up right as you would expect right people general who earn more generally buy nicer stuff But it's not that much nice right call like the law the stomach like it's not like if you earn 10 times more than me You're gonna eat 10 times more calories, right? Like you're just gonna eat you know, you're going to eat 10 times more calories. You might even eat less calories for all we know. It's one of those things where at some point, your consumption is not going to keep going up.

Now, there are people, you're like, but I know someone's like, yes, they're exceptions to the rule, but they're exceptions. I love when people say, you know what? Cutting, spending, everything, controlling, spending, everything, because look at these rich celebrities that went bankrupt. Look at this rich celebrity, that rich celebrity,

this, and they'll have a good number of examples. They may have 10 examples of celebrities that went bankrupt. I'm like, okay, you have 10, I have every other celebrity. You have N equals 10, I have N equals, number of celebrities minus 10, right? It's like, are you thinking about what you're saying? You're literally, I can name every other celebrity that's rich, right?

And that's a lot of stuff in the space. It's like, I don't really care as much about mindset. I know mindset matters for raising income. I know what matters for getting yourself motivated. I would not debate that, but like mindset's hard to test. And until we can get some sort of brain monitoring so we can understand mindset, I think the data shows its income.

Like, for example, I know nothing about the rock or Oprah, right, or any other, you know, pick a, or, you know, Paul McCartney. I know nothing about how they think about money and their money mindset, right? Someone may know something, but I don't know. But what I do know is they all have high income, right? They all have wealth of some sort that provides them with income. And I know that with, with a fact. So I know that they can probably save decently because they have high income. I don't know if they're good with money. They could be terrible with money, but they're still not as terrible

enough to offset their massive amounts of income, right? That's the key, you know? So I think thinking about that is what's important. So just, you know, that's why I try to challenge these types of things. Well, the reason that the Rock's rich isn't because he's optimized his avis points on his like flyback miles and stuff. I've just never found out. You may be doing that. Oh, you probably got a guy that does that, but I don't know what it's called. Do you know what it is? What's that group of people that do YouTube videos

about how to get all different special types of cashback and like hack cashback with different cards? Do you mean like rewards card stuff? Like I don't know if they're credit card hacking or something. I think I've heard of that. I know what you're talking about. I can't remember the name. The point guys, that's like the website for this.

There's a huge, huge community of these people on YouTube. And I kind of watched a bit of it. And I was like, I'm so not compelled by this. It just seems to me, it's such a more sort of forward focused growth oriented strategy to go after earning more, whether that be through not necessarily always working harder, but looking at leverage, like leveraging your skills, leveraging your network, so on and so forth. So yeah, I think we're in Sympathica there. Talk to me about being able to spend money

guilt-free because this is something that I struggle with chronically. Yeah, so I think there's two things to focus on when you're trying to spend money. The first is like, think about what fulfills you and find you. The hard part, this is kind of a philosophical debate of the sorts of like the people have been asking this for thousands of years, you know, know thyself, right? That type of philosophical, like the better you know yourself, the easier it is going to be for you to spend money. And what do I mean by that?

It's like, I, for example, don't spend a lot of money on clothing. This is this t-shirts, like $8 from Amazon or something, you know, $8 from Amazon or something. I don't have a car. I'm 32 never had a car. I always live in big cities, Uber, and Subway everywhere. But I do spend a lot of restaurants. I live in New York City. I like going out to nice restaurants. I will spend what somebody consider an exorbitant amount of money in restaurants. That's fine because that's what fulfills me. That's what I like. Just like someone else, maybe like a fancy watch or a fancy car, etc. I think the most important thing is to figure out what you like. Don't always listen to studies, studies help a lot, they can help guide, but you need to test and learn basically. I think let me give you an example of this. For example, you've probably heard

or your audience probably heard like, hey, you know, experience is fulfill people more than material goods, like a fancy car or watch. It's better to go on a vacation and have a nice watch, right? But that's the average result, right? You have to realize like, if most people, let's say, like, you know, 60 or 80% of people are extroverts, I don't know the exact number. If that's true, then if you ask most people, they're going to be like people that like to go out and do stuff, they are going to prefer to spend their money on doing stuff, like going out, being extroverted. But if you're in the minority or you're not one of those people who enjoys that, and you're just listening to it, everyone else is telling you, you're going to make, you're going to go on these vacations be like I didn't really like that that much

I actually would prefer to stay home and like have a nice watch and maybe go to a like a local restaurant or something I don't know I'm just coming up a theory is here, but you get my point like don't just listen to what everyone else says and I mean data matters Don't get me wrong. I'm the biggest proponent of data, but it's a guide. It's not like a foolproof thing You need to really understand yourself. So it turns out to send money to kill free fulfillment's the first one The second thing you want to think about is what I call the 2x rule. And the 2x rule is very simple, right? Let's say you want to buy a nice pair of dress shoes, you know, that says they're going to cost 300 pounds. You want to have them for a decade. You're going to have them for a long time. But that's like a sport for you.

That's a bit more money than you spend on dress shoes. So what you do is you save an additional 300 pounds. So 2x 600 pounds in total. And you take the other 300 pounds, so two X, 600 pounds in total, and you take the other 300 pounds that you're not spending on the dress shoes and you invest in stocks or you save it to eventually invest in real estate or you even donate. There's a lot of things you can do to kind of get your mind out of this. So that's what I would say to think about is like, find tricks you can use to like mentally get rid of the guilt. You're not like, oh, I'm guilty of spending this 300 pounds on this shoes.

Like, oh, well, I'm also investing in my future. So that's great. Or I'm also helping a charity I care about. So anything like that would be really useful. What do you think the guilt comes from when we spend money? Why do you think it's that psychologically? Yeah. So I don't know as much about the UK, but I know in the US, there's a lot of like messages out there. Like you should be spending less.

You should be cutting your lattes. It should be like, and that message is being repeated so many times that people get into a space where anytime they spend money, they start getting in their heads a lot. I think that's a lot of it. Another thing's personality, some people just have a personality trait where it's really hard for them to spend money

and that's much harder to get over. I don't know the way to do that. If you're like somebody who just, you know, you just can't spend money no matter how rich you are, I'm not gonna be able to help you with that. You're gonna have to like look more into that. But I think that sort of comes from. I think there's just a lot of guilt out there. There's a lot of guilt that we put on each other. It's

not necessary. I've got a bunch of friends. We're all working class, right? Northeast of the UK, working class of the working class. And slowly over time, we've managed to clamber our way a bit by bit, probably up into middle or up a middle class or something like that. But man, you're spending habits, actually this isn't true. Some people spending habits outpace their movement through the class system. Other people's lag behind and me and a ton of my friends are whatever dynamic it is that we have lag behind so badly, so so badly. We've, I remember this one time, a little while ago now. I'm much better than this, but as mid 20s, right, 26, 27, I've been running this nightclub business for ages, and it's really successful.

One of the biggest in the Northeast of the UK, then we start opening up other cities and whatever. I remember I was in Asda one of our supermarkets, and I was looking at the different types of yoghats that were available, and there was astas, like finest range, which is the top of the range one, and then there was astas normal range. And I remember spending at least two minutes vacillating between whether or not I could treat myself to get the pack of four yoghets that was whatever £1.65 more or something. And that was, it was a real formative experience that I had on my own in as they're looking at some yoghurt because I realized like at that moment, do this, it simply does not fucking matter. And then over time, as you start to actually learn a little bit more, especially Naval's book, Eric's book about Naval really helped me with this that look, with those sort of decisions, just expedite them, optimize for satisfying, just get

the decision, don't be happy with the decision. And for me, a lot of the time, the happiest sort of decision that I can make is one that I do quickly. I actually take a lot of satisfaction from just, yeah, fine, cool, that one. If I allow myself to sink into the decision for a lot longer, that paradox of choice comes up, I start finding myself being more of a maximizer

than a satisfaction, but yeah, man, there's something about having that working class background and sort of coming through and you just never, I don't know if money was not a problem growing up, but just you were always conscious of being frugal, right, and sort of not splurging. And there's something, I don't know whether it's hard coded into your DNA.

You can definitely get better over time, but it's very conscious for me to spend money. That being said, same as you, if I'm out at dinner, I have absolutely no problem just going to town with crispy Brussels sprouts side that's 15 bucks for no reason at all, because I just want to taste them. You know, it is strange the way that we spend our money and the way that we have that. I think the psychological impact of that is it's pretty unique. You had a story that. I think the psychological impact of that is, it's pretty unique. You had a story that I enjoyed about the Vanderbiltz

and their lifestyle creep. Can you tell people that story? Yeah, so the Vanderbiltz, it's actually very funny. So Cornelius Vanderbilt, who was the original, I don't know, patriarch of the family, right? He grew the fortune, I think it was $100 million or something in the late 1880s. I can't remember the exact figures. And he gave it all to one of his sons, just one of his sons. He had two sons. Sorry, was that the richest,

was either richest person on the planet at that time? He was up there. He was up there. I don't know if he was the richest he might have been the richest. I can't remember the exact way that he's like top five for sure. He's top five, you know, of his era. And he's like, I'm not going to split my money because I know that's going to split the fortune. So I'm going to leave it all with my, the son I trust the most. And he's like, I'm not gonna split my money because I know that's gonna split the fortune, so I'm gonna leave it all with the sun. I trust the most. So he gave basically mostly all of it to one sun. That sun managed it well, and it doubled basically.

He just managed the railroad well, like everything went well, right? I think it was in railroad's mostly, yeah. And so, but then that's where the problem started. In the next generation, that family grew up knowing only, you know, think about it. Cornelius grew up with nothing, basically. His son grew up with kind of nothing,

and then they got rich. But his son, son, this is grandson grew up in only opulence, right? So that next generation is where everything just went haywire. And they just started spending like, they, so I don't know if you knew this, but in New York City on, I think Fifth Avenue, you just have all these mansions. Now it's all just massive commercial buildings. Imagine mansions, people just walking up

until literally the most expensive real estate just living there. They had all these mansions, all they threw of these parties, like there are stories about parties where they were on horseback, like everyone was on a horse in someone's house, like dining, eating, like network, I don't even know how you would do that. You ever been in a place where you have to hold like a, you know, a food and eat the food and drink at the same time, imagining that on horseback, I don't even know how you would do that. You never had been in a place where you have to hold like, you know, a food and eat the food and drink at the same time.

I'm imagining that on horseback. I can't even imagine they were doing that. They'd smoke like cigars, rolled with $100 bills. Remember, this isn't the 1880s or something. It was like, absurd 1890s or even early 1900s, whatever it was. And there's just this insane amounts of lifestyle creep, which is just unheard of.

And it's not, I don't even even say it's lifestyle creep, but it was just the sense of like, well, they had a very high income. And like the, the fought, you know, Cornelius's son, so the second generation never really spent that much for them, the third generation is like, no, our spending sure match our income, right?

And then they just matched. And then they basically lost, they lost almost everything in the Great Depression. They had to sell so many things. Like they sold a one house at like, you know, 1% of the value they bought it at, like just fire sales stuff. Like it was that bad. No one could afford any of these luxury goods so they got wrecked.

But that's kind of a great story about like, what can happen when you're spending so out of control? So, dude, that shit blows my mind. And it is one of those things where you presume that dynasty wealth is just going to continue. You know, you hear these stories about whatever it is like, if Jeff Bayes' else drops a hundred bucks on the ground, it's quicker for him to earn it again than by his impassive interest than it is for him to bend down and pick it up in half a second or something. So you do kind of think that wealth is this unbeatable thing. And I wonder whether there must come a point, there simply must come a point where the critical mass of your wealth can outstrip essentially any desire to spend it shy of trying to pick up nation states. You know, if you've got 50 billion or something like that, I actually don't know whether

it would be possible for you to, but the point is going back to that, that this lifestyle creep, right, the fact that your tastes can outstrip your ability to pay for them over time. And that's kind of the story that I was talking about with the working class thing. And it does really seem to be sort of two types of people. I can't remember who it was. This was a Morgan Housel quote where he said,

LeBron James is rich, the guy that writes his checks is wealthy. And he's talking about the difference between, Ola LeBron James seems to be like a relatively smart business one too. That sort of athlete mindset, you know, like some kid that maybe grows up in the hood or whatever and then has never had cash, but super keeping up with the Joneses

very much bothered about their labels and status, stuff like that. One of the things that I thought was interesting to do with lifestyle creep, one of your solutions to it is to kind of mediate increases in wealth versus increases in spending, which you can explain in a second. Take me through that, but then also explain how someone that's self-employed, where those changes in income and wage aren't quite sort of obvious to see. You just sort of get big chunks of cash.

Maybe you're on dividends, you're drawing down, maybe you're on a higher commission structure. It's a little bit more difficult to do. So how do people protect themselves from lifestyle creep and then what do you do if you self-employed? Yeah, so to protect yourself against lifestyle creep, I mean, I've actually run simulations on this. Like you imagine someone just getting raises over time

and it's like you straight linear raises over time. Of course, that's not exactly how the world's gonna work. But if you assume that and you say, okay, I'm on like a good decent, let's say you're on a decent financial path now, you're like on track, take your retirement goals, whatever, you're in a steady state, we'll call an equilibrium.

The question is, how much of my raises can I spend to stay on that track? And I find that on, I mean, I show in the book, there's a table, it depends how much you're actually saving now. So if you're a really high saver now, you have to actually save even more of your raise than what you originally saved. And it's very counterintuitive, but we can go into that in a second. Basically, I say like roughly, it converged to about 50%. So ironically, the number in the book is basically 50% because that's where most people are saving

they have lower savings rates. And so if you save half of your raises or big bonuses, you can spend the other half and it would not gonna affect your financial future, which means you're gonna be able to keep your consumption consistent over your lifetime, right? If you don't do that, if you spend more than that, then you're at some point your consumption has to drop off, or you have to do something else, or have some other income that comes later

out of nowhere that offsets that. So that's one thing to think about. I think what you were talking about, like, you know, LeBron James is rich, and the person who writes his checks is wealthy, right? I think it's just like stock first flow type you know, LeBron James is rich and the person who writes his checks is wealthy, right? I think it's just like stock first flow type thing, like LeBron James or someone has high income, they have a high flow, but that doesn't mean they have a high stock, right? They have, they don't have a bunch of wealth, that's just paying them consistently, right?

So, and I think the, you know, the premise of the book, and even more time, but earlier the same investment continuum, that's the difference between, you know, the flow, which is your income and the stock, which is your investments, right? And how that's gonna lead to your flow, right? So that's kind of the thing there. But I think the biggest way to kind of stop lifestyle creep is just to like, make sure you don't, I mean, I give some recommendations in the book.

I think the 50% is about right and actually matches the two X rule ironically. So it's like very simple to remember. It's like, has for you and has for future you. So if you're saving at least half of those raises for future, you can keep doing that pretty consistently. Now, obviously, their, their edge cases are that's not true, but I think if you're doing that, that's, you'll, you'll be decently well off, right? So you don't have to be saving 50% of your total income, but if you're saving 20% now and then

you get a raise, save half of that raise. There's a stat or a story that I heard around the government was struggling to get people in the UK to increase their pension contributions, but they knew that they needed to. And what they found was that there's a psychological, it's a loss of version, basically, right, that, or coupled with anchoring bias, a little bit, that like, this is what I was at before, and now you're trying to, what, take more away from me. But what they found was that if they suggested to people that when they get a raise, that an increased portion of the raise was contributed to their pension, people were just well up for ticking that off. So I think that it works in terms of the stats, it works financially, but it also works psychologically as well. So the pain of doing that, of holding back on like

money that you didn't have, is going to be significantly easier for everyone. Yeah, that's why I say I think you have to begin a decent financial spot initially, because if you feel like you're struggling to get by, you feel like you don't live the life you want, and then you get a raise, you're going to want to spend all of that to where you want to be, right? I'm not going to lie. You're going to feel that way, right?

But if you feel like, oh, my life's decent, I like this, this is good. And then you get one of these what I call positive shocks or a raise or a bonus, then saving half, you can do way, right? But he feel like, oh, my life's decent. I like this. This is good. And then you get one of these what I call positive shocks or a raise or a bonus, then saving half, you can do that, right? So I just as long as you're mentally in a spot where you feel okay with what your current spending is and how you're saving and everything, that's when the race and stuff will work. If you're in a spot where you're not, it's going to be really tough to only say 50. If you just feel like you're just living a subpar life compared to what you want to live. So what about renting versus buying? That's a very difficult question. I think it's probably one of the most difficult questions

out there. My long story short conclusion is I think, you know, at least within the US, most people are going to buy. The question is not if, but when? I think the main, there's two things I think about, one societal reasons that's like, you can't rent in certain neighborhoods.

You want your kids to go to certain schools? You can't rent. The renters are allowed. There is a lot of stigma around renting versus buying. That's one piece of it. The other thing, which is a big benefit of owning a home, is like, you do lock up your housing cost, right? Like, you, you're not paying the market rent every single year. Like, I, I'm a been a renter my whole life. So I've been paying the market rent every single year and going out. I do basically once a year on average, and I go and pay the market rate, right? And so because of that, you know, rents have gone up and so I'm paying

more of there. Now someone say, okay, well, if you locked into mortgage in, let's say 2012, I didn't have money, but let's just say I did have money to do that. You know, I could have locked in something great, but I would have to pay for, you know, the taxes on that, the maintenance, I couldn't move, I couldn't be mobile. There's a lot of things with the today's world where everything's remote, it's a little bit easier to do that. But back in the day, I didn't know if I was going to live, and I started in San Francisco, then I was in Boston, now I'm in New York, so I've jumped around a lot of things with today's world where everything's remote. It's a little bit easier to do that. But back in the day, I didn't know if I was going to live in I started in San Francisco, then I was in Boston, I'm in New York, so I've jumped around a lot. So in the book, I kind of discuss all the specifics of how much do you have to have, ready to buy or versus rent and all these type of things. But those are the main issues I think about. And even the people

that I know that are like very anti-renters, I think a lot of those people end up buying anyways. And if you see like home ownership rates generally go up with income as well. So for the most part, people end up buying, does that mean you have to buy? No, but I think a lot of people even those who are like very anti-buying eventually buy too. Cause they know it's like, it's your leveraging too.

Like you think about it, you're, and right now with high inflation, with a very high inflation, I think the print today was 8.5% in the United States. If your payment is fixed, but inflation is high, assuming you're capturing some of that inflation through asset prices, through your job, you're getting raises that are matching inflation at least, then you're going to be paying that payment is fixed, but your income's going up. So I think the example

given the books, my grandparents, their payment was 270 a month when they bought a home for like 27,000 back like 1972 in California, a long time ago, I know it's crazy money. Seven acres. Because that's the pool inside. Yeah, I know, not seven acres. It's not a major house, but they bought this house and they're paying 270 a month,

but 10 years later by 1982, that payment had been cut in half in real terms. If you just suggest for inflation, the same person, you'd be paying half, imagine a rent going down by half in the next 10 years. That's what could happen. Obviously, that was a very high inflation period, but from now for the next 10 years, we could be experiencing that right now. And then 10 years from now, that payment's lower because you locked in when everyone else did it. So that's something to think about. One of the things that I like about a home ownership, at least with the way that I

am in the UK, again, disadvantage of being from the northeast of England, bad weather, not fantastic international flights, and this working class mindset around spending money where you focus obsessively on yoghurt. But one of the advantages is that the value that you can get from a property is insane. Man, like I've got, I'm just going through on my six house purchase now, right?

Some of those are five beds. The most recent ones are four beds with an on-suite in every single room. None of them have ever been more expensive than half the average house price of the UK if you go on right move.co.uk. I think the average house price is about 345 and the most I've spent on any properties at 170. Right. I've got my house that I live in with two of my housemates that are like my buddies

that live there as well. So that I understand one of the challenges people have. If I buy a house, then that restricts my freedom, especially if you're young as people are now marrying later, starting families later, perhaps wanting to be this nomadic, wantropanar thing. Cool. Again, it depends on how much headroom you've got above what you're spending, so on and so forth. But I highly, highly recommend for people

if they are keen on putting money into real estate, if they're like that security, spending your money by getting a house with at least two other lettable rooms means that you basically zero out a lot of the risk, pretty much all of the risk, right? So the property that I have back in Newcastle, yes, I'm not benefiting from the fact that I'm living there, which would have been significantly cheaper, but I'm also not losing money by having that property continue to take over because I've got two guys that live

there who pay me their rents for each of their rooms. Now, I'm in an Airbnb in Austin at the moment, paying £3,000 a month because it's a long-stay Airbnb. So, that, I mean, that's things. I'm paying the mortgage on the house at home, plus I'm paying whatever £3,000 to be here. But, it still makes sense for me financially. It still takes over. It keeps everything moving. So So yeah, to try and sort of fly the flag for someone who really likes, uh, read the state as an investment strategy, um, but also wanted that freedom and that liberty to be able to move around thinking about getting a property, which you can then, I don't know whether you call it sublet in America or use, yeah, lodges or tenants or whatever that see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you see, you know, it's not degrading over time that it's being kept in goods. It's perfect. And that, that to me is a real lovely blend of, of the two. Obviously, again, you need some capital to put up in order to be able to make that work.

You need to be in the right place. If you're living in London or slightly more expensive cities, you're going to struggle because you're just not going to be able to get done the ladder quite as easily. But that's one of the solutions that I've found. Yeah. Everything has an issue with this. It's always relative to your situation. So it's really hard for me to give blanket statements when like, yeah, if you're living in

the Northeast or UK, it's very different than living in London, very different living in New York City, very different living in like, you know, Tennessee or something, you know, rural Tennessee or something in the United States. So there's always different factors you have to take into account, but I agree. Let's say that someone hasn't been interested in investing at all, they've just been spending their money like a normal human. What do you say to somebody when they say that they can't be bothered to work out investing? Why is it for me? I don't really get it. It seems like a lot of work. I don't want to do it. Think about your future self. I think you have to be selfish.

I think you have to, because if you actually look at the data on the SPL about savings, motivations, why they save, save an invest money. And the one that works, they can be like, oh, what if you actually look at the data on the SP about savings motivations, why they save, save and invest money. And the one that works, they can be like, oh, what if you want to save for vacation? It doesn't work. Save for your children, doesn't work surprisingly. The one that does is save for your future self. Like imagine, they've done these experiments

where they take your face and they're like, age you with this like photo, AI, aging stuff. You see what you look like as an old person. I remember this one around at one point. Remember there's like, things trying to happen. Yeah, you was definitely the Chinese trying trying to do facial idea on everyone. But yes, yeah, but imagine that. You see yourself as an old person.

You can now imagine, wow, I'm going to be an old person doing all this stuff. So maybe I should be saving for my future. Maybe I need to have income. And so in the US, you know, if you don't have pension or anything like that, you're not going to have any income besides social security. And so unless you're willing to live on that type of lifestyle, then you're probably going to need to save some money. So that's the thing. It's like really what type of lifestyle do you want to live? And if you can live a really cheap lifestyle now and you're willing to live on that type of lifestyle, then you're probably gonna need to save some money. So that's the thing.

It's like really what type of lifestyle do you wanna live? And if you can live a really cheap lifestyle now and you're like, I'm gonna live that forever, I don't need to save as much, then fine, that's fine. There's nothing wrong with being frugal and living a really low cost lifestyle, if that's what you want. I don't shame people for wanting to be super frugal.

I don't, that's completely fine. I just don't think that's a great solution for everyone because I don't think that's true for everybody, right? And so figuring out what works for you is what's completely fine. I just don't think that's a great solution for everyone because I don't think that's true for everybody Right, and so figuring out like what works for you is what's most important. I tried Stock investing a few years ago Probably should have just left that fucking Ethereum in and that would have fixed all of these problems, but I and what I found very very quickly was I don't think that I have the

mindset to be a trader, certainly not one that picks stocks, and the neuroticism that I found myself dealing with around having a thousand pounds in Activision and a thousand pounds in Apple, and you know regularly seeing swings in an entire portfolio of thousands of pounds per day. Across a not a particularly huge portfolio, you only need like 10 or 20 grand and you can have a couple of bad days and you're like, my net worth just went down by a thousand pounds today, that's pretty terrifying.

So yeah, picking individual stocks make that a lot worse. However, since then I've taken Morgan's, and you're suggesting, and I'm just in the S&P at the moment. I don't obsessively check my Etau every day. You're not a fan of picking individual stocks, presumably for a more data-driven reason than mine. But my point is that I think for a lot of people, the psychological impact of kind of like being an individual stocks is a pretty high toll to pay as well. Yes, I agree.

So there's two, there's really three reasons, I guess, why I'm not a big fan of individual stocks. The first one is one that maybe your audience has heard what I call the performance argument and the financial argument. Basically, most stock pickers, active managers, what do you want to call them? Don't beat their benchmarks, don't beat the market. So let's say the benchmarks, SAP 500, they don't beat the market. So let's say the benchmarks, S to P500, they don't beat the market after three to five years

after fees, right? And everything they do, they just don't beat the market. Why? Because on average, if you think of their fees, right? So imagine, let's say half the people beat the market, half the, don't remember, they're buying and selling from each other. It's a very theoretical argument, goes back to,

I think the one in charge came out of this argument. Basically, theoretical, half the, they're buying and selling from each other. So half we're gonna win, half we're gonna lose, the one in charge came out of this argument. Basically, theoretical. Half the, they're buying and selling from each other. So half we're going to win, half we're going to lose. And then after you take out fees, it drops that, right? Like, if only half can be up and half can be down, then like on every trade, then like, only half can be winners, half can be lose. But then there's fees and transaction costs, so there's like some slippage in the system,

so it's going to be less than half, right? So that's why on like 25% can outperform their benchmarks. And you don't have to calculate all that. There's that they're actually already do. There's something called the Spiva Reports, SPIVA, Spiva. And they basically do this for you. They look at every equity market across the planet. And you can say, let me see the three or let me see the five year, how did these people perform? And in some markets, some people do outperform a little bit better than others, but on average, like 70, 80% won't outperform. It's like a three to five year period.

Is it kind of like a gambler that is able to beat the odds in the casino consistently over time, that the longer that you decide to stay in the market, so to speak, if you're picking individual stocks, you're part of the 25% of year one, but then you're also part of the 25% of year two, and then you're also part of the 25% of year three that didn't end up being beaten by the market. So over time, consistently, you actually end up being like a real outlier anomaly if you haven't lost money at some point during that period.

Yeah, yeah. That's a way of thinking of it. I don't like to use gambling because it's like a negative expected value game. I would say investing is positive expected value, but what we're talking about here is obviously, as you said, the relative value. Like, you can still make money. Like, you can pick stocks and make money. You're just going to make most likely going to make less. And if you just put it into an S&P 500 or a world index fund, something like that, right? So that's the first argument. It's very well known.

The second argument that one I personally like more is what I call the existential argument. And that's basically, you don't know if you're any good at stockpicking. And there's a lot of data to show this. They've found that they can identify skill in about 10% of stock pickers. So let's say you can identify the top 10%,

you can identify the bottom 10%, that's 20% out. That means there's 80% or four out of five people, you could play this game for a while and not know if you're good. And I think let's, let's use the LeBron James example. If myself and LeBron James went to the basketball court, you would know within minutes who has skill and who doesn't, right?

You could tell pretty quickly, right? Who's good and who's not. But if me and LeBron James were picking stocks, we would know for years maybe, maybe LeBron's a great stock picker, who't, right? You could tell pretty quickly, right? Who's good and who's not? But if me and LeBron James were picking stocks, we would have known for years maybe. Maybe LeBron's a great stock picker, who knows, right? Just we just picking stocks. We have the same amount of money, we have to throw the capital. You may not know for a year, two years, five years.

And one of us could just get lucky. One of us could just have one thing in our portfolio that just moond and we would beat the other person because of that one random pick and it got lucky. So that's the difference. Like there's a lot more luck in stock picking there is and like, picking. There is in computer programming or basketball. Something where the skill is very identifiable. So that's the second argument. I don't like what you were talking about with like, oh, I had $1,000 in Activision. Why was I obsessing on my portfolio? I think what it does, you start

to identify with the investment. When you pick the S&P 500 or let's say you pick a world index equity or stock index fund, when you pick a world index equity or stock index fund. You pick a world stock index fund. That's the default choice. That's like, oh, here you go. Here's your choice. I didn't choose that. So if the market goes down, it's not your fault.

It's out of your hands. But as soon as you say, you know what? I'm going to just deviate a little. I'm going to pick Activision. I'm going to pick Apple. Now you've made a choice. Now it's your fault if it goes down. Because you made the choice.

You're the idiot who made that choice. But if it goes up, you're a genius, right? So you see it's all an identity. I think that's probably the most compelling argument because you're going to start identifying with your investments. You're going to be obsessing over the thousand. Like I remember I've done this too.

I had like 2% of my wealth and individual stocks. And yet, the 98% was moving up and down. Like magnitudes more, like, you know, or is the magnitude more than the 2%, yet I'm obsessing over that because I picked it like some idiot, you know, it's silly It's a very silly thing to think about but you obsess over your active picks You're not gonna obsess over your SMP 500 index fund whether it's dropping, you know in the same way I think you had a couple of stories about even you somebody that lives in the fin Twitter financial advice world

and you Flubbed a few stock picks recently. Can you tell everyone about those? Yes, so I've done... So I remember I have a whole... This is how tough this problem is. So I have a whole chapter in my book, chapter 12 called Don't Buy It Why You Should Buy Individual Stocks. Yet I have 1% of my net worth of individual stocks and I say, hey, if you're doing it for fun or something that's fine and like 5% whatever do it, have fun. And that's what I do basically. So I keep 1%, I did it with some friends and I bought two tech companies. I'm not going to say

that I'm not here to pump my bags. They're down massively. They're down bad. And so one's down, like what IPO did 19 went down to like six. It's not doing great. The other one actually was at 15, went to 32. I was feeling pretty good. And now it's down at like seven. So that one's down, like worst at all the others. And so they're down bad. And I have them. I'm sitting on these losses. I might sell at some point and take the loss harvest or whatever, but we'll see. So I'm saying, it's tough for everybody.

Even me, the person, I wrote a little chapter on this and I still do it, but I do it for fun. And I think it's okay to do it for fun if you want to get out of your system. I just don't think you should do it with the bulk of your wealth. Because it's a tough game. It's really, really tough.

Don't play that game. So. Okay. People aren't supposed to buy the dip. We've explained that. That waiting to buy the dip causes you to wait for so long that you have missed out on potential gains to move up. You've maybe gained a 20% intra-day move, but you've lost a 60% over the last year increase. You should have gone back and done that. What should people do if they're not buying the dip? It should just keep buying, I mean, it's the book, it's like buy over time,

like it's that simple. And what do I, so it's actually kind of ironic because when I say don't buy the dip, I'm not saying that if you're in a dip and you happen to have cash by the dip, right? However, you shouldn't hold cash waiting for it, but they're very different, holding cash and waiting for a dip is bad, but buying a dip is good.

So, they're very different because, let's say by chance, you're selling a company and by chance, the money hits your account on that day. And by chance, there's a 10% intraday drop in the market. That's probably going to be a deal of some sort relative to other days. So? So, I mean, of course, the market keeps dropping. That's, of course, possible. But you just got a 10% discount, right? And if you have a lot of money, get invested, right? That's the thing. And on average, that's going to make you more wealth of course. It's riskier to do that. Of course, it's riskier to do that. There's no debate there. And if you're worried about risk, you're probably just putting too much money into a

risk of a portfolio. So you need to figure out, okay, maybe I shouldn't be putting into 100% stocks then. Maybe I should be adding bonds or adding other things that are diversifying my well. So that's my counter people like, I can't put it on to risky. Then it's your portfolio, then put it in a less risky portfolio and just put it in now and then just wait, you know. So that's what I would say to people. So about by the dip. What's the nuance around dollar cost averaging? And I think it's dollar cost averaging and then is it like average pricing in or something? There's two different ways of doing it. Yes. So technically right now in the financial

community, there is a there's two definitions for dollar cost averaging and there's no way like we can't I think the genie's out of the bottle. We can't put it back in basically. So the original definition of my understanding of Benjamin Graham dollar cost average just means buying over time. You're buying. So like let's say you have a 401k here in the United States. I don't know if you guys have like a defined contribution plan, whatever you guys call that, you're putting in money every time you get paid. You're not taking your money and waiting. It's not like you got, you know, let's say you got a hundred thousand dollars from selling

a company, a hundred thousand pounds, you would put that money into the market right away. That's called like a lump sum investment, but you're basically buying like as soon as you can. That's called dollar cost averaging. The other definition, which I, in my book, call Average In. I'm trying to change the terms here, is like, if you had that 100,000,

you say, I'm not gonna put it all in today, I'm gonna put in $10,000 a month for the next 10 months until it's in, right? So I'm going to, I'm going to slowly average into the market, right? The problem is that's also called dollar cost averaging. So when you have two different names for, or the same name for two different things, it's very confusing to people.

Because like, Nick, you said, lump sum, these dollar cost averaging, but then you said, like, nothing can be dollar cost averaging. Well, it's like, no, that's, that those are different terms. And I'm trying to fix that. It's really tough. I don't think it's going to get fixed, to be honest with you. I try to come on podcast and tell people, like, let's just pick a, I don't care which one wins. Let's just pick a term and go at that. I personally think that original definitions should win. So dollar cost averaging just means buying over time, just keep buying. They're almost synonyms for all practical purposes.

I mean, dollar cost average, technically, as you know, what is it? Six syllables and just keep buying as four. So we can just reduce the syllable. We just reduce the syllables by 33%. Why not do that? So let's just call it that. When it comes to the person that's maybe got the windfall, their concern might be that if they put all of their money in right now, oh, well, what if there's going to be a big pullback at some

point in the future? If I do that over time, I'm going to continue to get. But again, the point is, what was that meme where it says the 100 year moving average for the stock market looks pretty good? Yes, it's ramp. That's ramp capital. Yep, it's amazing. Yes. Yeah. So over time, everything is sweet. And I guess if you have a long enough time horizon, your hundred grand that just goes in today is better than that hundred grand spread over the next 10 months at 10 grand a month.

Yeah. Yeah. So the issue is on average, like 80% of the time you're going to be better off by putting the money in right away. Then like in the case where it's crashing. So like you're like, well, I'm not, I don't care about that. Okay, then don't. Then just pay, you're gonna just realize the market's probably gonna go up over this time.

You're probably gonna lose a little. And if you're okay with that, do it. I don't think there's anything wrong with averaging into the market. If you're comfortable with that, and that's not makes you comfortable, do it. Don't do things you don't wanna do. But there's so many people that don't wanna take the plunge,

and they just haven't looked at the data. And it's like generally you're probably gonna be okay. So that's my counter to that. The other thing too, behaviorally, the only time when averaging in beats putting all the money in right away versus the lump sum method, where you could slowly wait in when that's better is when the market's falling.

That's the only time it's true. Think about it, right? If you put all the money in now and it crashes, that's bad. So if you would, if instead you would just average in, you're going to be buying to a falling market, but that's when you're at least enthusiastic to buy. When the market's dropping, 10%, you're like, I don't know if I'm going to wait till the dust settles, right?

And you do that. You wait till the dust settles. It's March 2020. You're waiting, I'm going to wait. And then next six months later, it's on you all the time. And then you're like, oh, crap, the dust settles. And now I just missed this massive rally. So my counter to that is like, don't do that.

It's really tough. The hardest time to buy is the only time it out performs, like behaviorally. So that's why I say just buy now because if you're in the case where the market's falling over time, you're not going to want to buy anyways. You're not going to even follow the time when it matters, you're not going to follow it. You said earlier on about the look that's involved in investing. How much look is involved and then how can people mitigate the impact of luck on their investments? I think the best way to mitigate luck is just kind of your asset allocation. How you invest your money, right? So it's like, are you well diversified, right? Do you have emergency fun? Do you

have all sorts of things that help you plan and prepare for the future? Of course, you can't know everything, right? If you're, you know, if you rely on like, oh, well, I own like three businesses that are restaurants and then COVID comes to and there's lockdowns and you hit, there's nothing you can do. That's like some, that's like an act of God for all practical purposes. There's, at some point, there's nothing you can prepare for. There's certain things you can't prepare for, but, you know, you can probably do something that's going to be decent, right? So I say, like, diversify fine ways to, you know, to have your wealth so that you're not

worried about some crazy, easy scenario. If everything concentrated in Apple or Activision something like that, then you can get hit really bad and it would be really tough, right? So type of stuff happens, right? And I think there's this, there's this quote, like, you know, concentrate to get rich, but diversify to stay rich, right? And I think that's true, but it depends how rich do you want to be. I think you can get relatively rich, like through diversification.

I don't think you need to concentrate. If you want to be a billionaire, yes, that's completely true. You want to be like a hundred millionaire. Even a ten millionaire, you probably need some sort of concentration at some point in your life. But if you're like, yeah, I'd be fine with like two million bucks and like that'd be a nice life. I could live my life with two million dollar, two million pounds, whatever it is. You probably can do that through diversification just buying over time. And that's the thing what I'm trying to get at. Like for most people, they're probably going to be fine. Have a great life, live a decent life with that type of lifestyle. And it's much easier than trying to concentrate. And then you get hit with some crazy risk.

And then you lose more money or something. You know, it's really tough that way. So what do most people get wrong during a crisis? I think the thing during a crisis, I mean, obviously, it's tough. I'm not going to sit here and say, like, oh yeah, March 2020 was a cake walk. It wasn't. I live through. It was my first real big crash that where I had money invested. I saw my wealth dropping 10% one day

and then up 2% and then down another 10%. I saw this happen. What I think people get wrong is, I think my favorite investment quote is, fear has a greater grasp on human judgment than does the impressive weight of historical evidence. And that's from Jeremy Siegel, right? And so that's that fear grasping us.

And it's like the world's gonna end, we're never gonna get better, every end. I think humans are more resilient than people think. And don't get me wrong, their cases were markets, one market goes down badly and something, Russia went down 80% in like a month this year during early 2020, sorry, early 2022. And that type of stuff happens.

But if you're diversified, if you only rush in stocks, then yes, you're screwed. If you only own US stocks, you could get screwed. Diversified across other asset classes, and you'll be fine. And in the case where, oh, what if all those drop? Once again, it's one of these apocalyptic scenarios, it's not going to matter where investment portfolios do.

And you're going to have much bigger problems. So that's my counter, what thing about a crisis? Like, yes, there's fear. Yes, there's going to be a 10 year period in the US or Europe or etc. where these assets don't perform well. They may even lose to inflation. This has happened before. I can guarantee in my lifetime, not guarantee, I would say very high likelihood that there's a 10 year period where US stocks have no return after a dividend's end inflation. And I don't know when that's going to happen. We could already be have started it for all we know, right? Already down from some point, we could 10 years from now,

we'd be like, wow, yeah. Remember when I said that 10 years ago, I could happen. But it's not about wondering what could happen. It's looking history and history generally, it's up until the right over the long term and just keep buying and see what happens, you know. What about working out when you should sell? Tough question.

I think there's three times we can sell. First one is just kind of a tactical thing that you should just do, at least in the US. There's that we have annual tax season. I'm guessing you guys do too. You just sell when you're rebalancing, right? You're like trying to rebalance your portfolio. Oh, my stocks did really well.

This here, my bonds do badly. Okay, I need to sell some stocks to get to bonds. There are cases to do that. I don't recommend that. I would say if you're gonna do that because if there could be tax implications, I would say try to what to do is instead of selling. If you're still a community income, buy more of the underweight asset. So let's say your stocks went up a lot and your bonds didn't. Throughout the years, you've noticed

this, oh, wow, it's going up, just buy more bonds and less stocks, just to kind of get them back into the, that's just easier and you're not going to do, there's no tax effects. That's the first time. The second time is if you're like in a concentrated position, you need to kind of get out of that and you're like, hey, this is way too concentrated. I need to sell at least a little bit of this. Let's say you're at a company and you've gotten RSC user stock. You've got like private stock from this company. It IPOs and now like 80% of your networks in this company, right?

I'm not saying sell at all. I don't agree with that. I think selling at all can be very risky mentally because if you sell it all and then it triples or it goes up 10x and you're like, oh look, we're all the world part of your encryptus idiot who sold all of the Apple stock because he's an Apple engineer and he sold it all. Don't do that, right?

But sell enough to kind of lock in your lifestyle and then let the rest ride if you want after that or kind of figure out what's that the mix for you, right? I don't know exactly what it is, but I'm not a fan of like sell. I'm not a fan of one or nothing decisions. I think it's very scary. So don't keep it all, but also don't sell it all. So find that some good mix. That's the second thing, right? You're in a concerted position. The last time is you're going to have to sell if you need to fund your lifestyle. That's the whole point. That's the whole point of life. You know, we're here to, you know, you want to fund your lifestyle. You want to go get a nice car. You want to get a nice

watch. You want to go to, oh, I'm going to do this big vacation. Any sell stuff, that's the point. I know my books call just keep buying, but at some point you're going to have to sell, and you're going to have to sell in order to fund your lifestyle. So remember that, that's the point of money. We're not here just to accumulate a bunch of money and then die. Like that's not the point of life at all. And I don't want to give that impression. I really am about people living the lives they want to live.

I just think there's more optimal ways to do that over time. Have you got any idea how much of people's pensions slash savings on average most people end up dying with? In the United States, I think those in their 60s, I think the average was 300,000 in their 70s. I think it was like 340. It goes up basically every decade. Only in the 90s, I think it went down a little, but I also think we're also getting to

generational effects. The people who died in their 90s in these studies. We're probably in the craze generation and the great depression. They probably didn't invest as much as people who died in their 60s. So there's generational things there, but on average, like it goes up over time. I think one of the most shocking facts that I discovered when I was looking to like retirement data is like only one in like six or one in seven retirees is pulling down principle. Right.

So imagine, you know, in a given year, they're living off their dividend capital gains or investment returns and their social security in the US and they're not selling down any assets. I think the most shocking set of ever learned was, so Michael Kitzies did this analysis for basically like, you are more likely to 4x your wealth over 30 years, following just the 4% rule.

So let's say you had a million bucks, you take out 4% the first year, so 40K in spending, the next year you kind of adjust for inflation and you take another 4% You're more likely to 4x your wealth over 30 years than to go below your starting principle So by the end imagine start the million you're more likely to have 4 million or more than you are to have under a million After 30 years. That's what's crazy. There's a lot of retirees. I think oh my gosh. How am I gonna? Am I gonna I'll live my money and then it's like oh no You're actually richer than you've ever been. And like, you can't even keep up.

And you're spending goes down in retirement too. So it's like really kind of shocking. These old people are so rich and they have no idea that it was gonna happen. And then their wealth keeps growing. Like, you know, and that's something that's kind of interesting to me. Like I'm looking at the data,

like what time of this retirement crisis? Don't get me wrong. There is a subset of people that are really struggling. We should find policy to help them. But a lot of retirees are not struggling in the same way. And I think it's unfair or unrealistic to like paint them, paint this like, oh, there's this massive retirement crisis. Everyone's going to be starving on the streets when it's like, I don't see that happening, you know, in the data at least.

So what was that story about the guy who won the lottery? Dad's story is crazy. Jack Whitaker. That's one of my favorite stories. So, the guy basically what happened was, you know, he's watching, he went to, like, or it was in West Virginia. So, there's just a story. Yeah. So, Jack Whitaker, they're in West Virginia. The, he was like the power ball or whatever it was.

I can't remember the name of the lottery. But there's tickets selling like crazy. 15 tickets a second or something. You know, 15, 15, 15, 45 more, you know, people just caught lottery fever. It's going crazy. Everyone's like, oh, there's all this money. So this guy named Jack Whitaker buys it, he goes home to his wife, they're watching the power ball, they have five out of the six numbers, like, oh, they're like, oh my gosh, like, this is amazing. We want $100,000, like, you know, it's some good money, but it's not like they didn't win the jackpot, right? So they go to sleep,

you know, they're like happy, whatever, and they say, okay, we'll figure that out tomorrow. They go to sleep, that's it. Okay. The next morning gets up, he's doing his morning coffee. Jack looks at the TV and he sees, oh my gosh, they missed an ounce one of the numbers. He looks back at his ticket. He's just one of the largest jackpot. He actually had the winning ticket. Well, the largest single jackpot,

and I have to split it with anyone in history. It's like 317 million, there's a 300 million dollars. After taking the lump sum in taxes, I think he has like 160, 180 million. I don't remember the exact figures in the book when he's all in there. He has all this money and you know, you're thinking like, wow, like,

oh Nick, I already know what's gonna happen, right? He's gonna have all this bad, you know, all this bad stuff happens. His granddaughter dies of a drug overdose. He ends up Jack Wooder, her himself ends up getting addicted to like trying to pay women for sex. He's like drunk all the time.

Like all these bad things happen. You're like, oh Nick, I knew this. You know, it's just another lottery winner story. But you don't, he's like drunk all the time. Like all these bad things happen. You're like, oh, Nick, I knew this. You know, it's just another lottery winner story. But you don't, here's the trick. Jack Whitaker was already rich before he won the lottery. He was worth $17 million. He owned his own construction company. Right.

And that's when he realized that's the thing that money can do to people. This man lived in, he lived in Virginia. It's not like he's living in like New York City penthouse where 17 million could like, he doesn't go as far. He was living in a place where he could basically do whatever he wanted He could have done all the stuff he was already doing right but as soon as you got the money

It changed him and I think that's a important lesson there about like what how money can affect people and so to like think about like One is enough for you and like realize that like I don't even understand why he was playing the lottery if I'm being completely honest I think it was more of a social thing and then he won the lottery and it consumed him completely. What do you mean when you say people need to know when enough is enough for you? I mean, this is a great question. It's just about figuring out like, at what point are you gonna be satisfied?

And like, okay, here's like the level of like consumption I want so that once I get here, I stop. Because if you don't, you're going to keep chasing that. You're going to say, Oh, I've no richer friends and they're doing this or they own this or they're sometimes fly private. I should sometimes fly private. You're going to keep getting there. You're going to keep following that to a point where you'll never get out and you're going

to always want more money. I've seen it happen so many times in terms of in the data, I've seen like psychological understanding why it happens. There's always someone richer, right? Every single person besides like, you know, Elon Musk and Jeff Bezos are like, can point to someone like that person's richer, right? And they mimic, because they flop back and forth

use their riches all the time, right? So ignore those two, but like everyone else can point to them. Even more above and be like, I'm not even that rich anymore, look at these people, you know what I'm saying? It's kind of crazy, but like as long as you can always point to other people, you're never gonna feel rich. And I think the example I use in the book is

Lloyd Blankfein, who's ex-CEO, Goldman Sachs billionaire. Obviously very rich. He says, I'm not rich, I'm well to do or something. He's like, you know why? Because all his friends, he's hanging out with David Geph and Jeff Bezos. He's not with people that are 10, 15, 100 times more wealthy than he is.

And he doesn't feel rich or else of them. And I get that. He can't go buy a $600 million super yacht like Jeff Bezos can, right? And so I get that feeling and you're going to say, well, that doesn't make sense. He's a billionaire, but he's doing a relative comparison, right? And I would say, like, you know, and I, the example I give in the book is, you know, to be in the top 10% of wealth in the world, you need roughly $100,000. It's like $93,000 in the US. So let's say $100,000, right? If I say, if you have over 100,000 pounds, you're rich,

you're in the top 10% of the world, you're rich, right? You say, but Nick, that's not fair. You can't compare me to someone in the developing world. He's like a farmer or something. That's not fair. Well guess what? Lloyd Blinkbine's going to say the same thing about you. He's going to say, you can't compare me to these average people who work these average jobs or whatever.

You can't compare me to them. I have to compare me to Jeff Bezos and all these other people. These are my friends, right? That argument, it's obviously a little ridiculous, but it's kind of true. You're making the same argument. We're just cutting hairs over where's the point? Like, oh, why can't we compare you to a farmer, you know, a developing farmer somewhere in the world? Why can't we do that? You know, a farmer in a developing nation? Why not? You're like, oh, but that's not fair. Why not? Tell me why? It's the same reason why

you, why Lloyd Blankfights making the same argument. It's just we're cutting hairs. So I think people never feel rich. So you have to identify as rich earlier in your life like I did for my age for my age. I Identify as rich not because I'm not even a millionaire not a millionaire at all But I have to do that and if I don't do that I'm gonna keep chasing money my whole life to the point where I lose myself And I'm worried about that and so I hope I don't do that so I have to realize I'm a rich citizen of the globe and like Think about the privilege I have here and what the type of impact I can make and so I think you have to remind yourself of that and if you don't do that. So I have to realize I'm a rich citizen of the globe and like think about the privilege

I have here and what the type of impact I can make. And so I think you have to remind yourself of that and if you don't, you can really get lost in it. So that's what I say. I don't say this is like a brag. I'm not that's not what I'm trying to do. I'm trying to get myself to think right. Otherwise, I may ruin my life in some way. And I don't know, but that's kind of my thinking. It's a message to yourself. Yeah, exactly. Re-enforcing. Yeah, dude, I keep having this conversation with people, especially since I've been out here in Austin, and Austin is a very interesting city. It's a city where it's cool to work hard

and very uncool to work very hard. It's a city where it's cool to be rich and very uncool to tell people that you're rich. Like, it's kind of, I think because there's so many new people here that, and there's a lot of money, everyone's very, very conscious of people that are sort of flashing their cash a lot. And yeah, that doesn't seem to me to be a healthy movement, culture, mindset, promulgated message about enough being enough, right? About you are worth a million dollars.

Almost every message that you hear from rap music, to personal development, to the sort of memes that you see online, to hustle culture, to GaryVee. Almost everybody says, well, if you've got a million, that means that it's easy for you to double that to get to two million, right? There's this video of Patrick Betdavid, where he's talking about, I always think about stuff in doubles. It's like, you know, it's like 16, 32, 64, 128, 256,

did it, I'm like, okay, what, what the sort of autistic view of numbers that completely actually removes them from their purpose and the framing, like, maybe there's some people who genuinely take a lot of pleasure from playing the game of the numbers on the screen, probably, probably are, but I think a lot more people, like you suggested, are genuinely existentially attached to their sense of self worth based on the amount of riches that they have. And it really, really fascinates me.

The desire for people to be seen as rich, what it means to be rich, and what it means to keep up with the Joneses and stuff like that. And I really do think, on one side, me vacillating about my yogic choices is a weakness, but on the flip side of that Me and almost all of the friends that I've got never thought that we would be here in any case

We didn't expect you know It's the position that you want to be in when you get to be able to do things And you don't have to worry about whether you covered dinner this evening and oh you can pay me back next time And you you know not having money worries is fantastic, but That's the materialism set point that I get to and I do I understand why people like to watch videos of you know like the NELK boys like Steve will do it and the guys flying private around the world like fucking cool and Steve's going and dropping all of this cash and stuff like that and you go go, well, yeah, that is, that is cool. But you can get probably 95% 90% of his life enjoyment with 10% or 5% of his net worth. Like the things that genuinely add a lot of value to his life probably aren't the private jets. They're probably not that. It's mostly the time-freedom and the ability to choose what he, to do what he wants, when

he wants with who he wants for as long as he wants and no one gets to tell him otherwise. And you can do that at like one 20th or one percent probably of where he is. I don't know. I just think that I'm looking forward to a more holistic hustle culture message coming out over the next 10 years. And I'm pretty sure that it's going to happen. Well, there'll be a backlash at some point when people are like, this is too crazy that we have to do all this stuff.

You know, and I think that's, I think you get the nail on the head there. It's figuring out what you want. It's like, actually, I have a mentor who tells me, like, yeah, you want to fly private? Like, do you realize? Like, you have to really, really hate first class. And the Costco Benchley to go pride, to rent private. And then from rent private to your charring,

to then I own the plant, right? There's all these, I'm sharing whatever whatever it's like the Costco exponentially for like obviously very small marginal benefits. I was like well I would never fly you know that's fine if you want to do a status thing and that's maybe you're getting you're getting some sort of utility off the status of flying private that's fine but like no one's gonna care I you know I get it but like most people don't think like that and I think it's kind of it's interesting you know. but most people don't think like that. I think it's interesting. What does that actual and perceived relative income graph mean?

Because I was looking at that and this is as you go up your relative and perceived income moves around, which I thought was pretty fascinating. Yeah, I believe it's from MIT study, and you could throw it up somewhere. Maybe it's here or something. I'm just messing with it. So there's an MIT study, and basically, it showed that as your income goes up, where you perceive you are in the distribution does not follow with it.

So people who are really poor know they're kind of poor. As you kind of get to middle class, that's usually pretty good. And then as you get above the 50% line, people in the 90th percent are even like, oh, I'm like at the 60th percentile. I know all these other, because they probably know a handful of really, really rich people are really high income people. And they're like, oh, I'm at a rich extent, oh I'm like at the 60th percentile, I know all these other, you know, because they probably know a handful really, really rich,

people really high income people, and they're like, oh I'm at a rich stand, so I'm like at the 60 percentile. I was like, no, you're at the 90th percentile, you just know someone at the 99th percentile. That's really what it is. And so that's just so interesting because like at the higher levels when you ask most people,

that's why when you ask most Americans, like what class do you most Americans say middle class? Even people who are clearly in like the top 10 percent, which I would say is, you know, upper to upper middle at least, probably upper class, I think the top 10% is probably upper class. What's top percent this is we're kind of in terms of earnings in America, do you know? I do not know off the top of my head I could and we could Google I have no clue what that is. But yeah it's just one of these things were like everything's relative so I've no clue what that

what that number is. I'm going to do it. Top 10% of earnings. America. Let me see. What do you think it is? Give me give me your prediction. Top 10% was he maybe two. It's either let's go one 50 household income. So here we've got investorpedia.com. How much income put you in the top one percent, five percent, 10 percent, top 0.1 percent, 3.2 million, top 1 percent, 823,000, top 5 percent, 342,000, top 10 percent of earners, 173,000. I said 150. so that was close. Not far off, man.

It's almost like you know what you're doing. Yeah. Dude, I really, really adore the book. Like, you know, you and Morgan, I think, has a two car garage for understanding how to do personal finance. I think you've absolutely nailed it. I love the fact that you've done summaries

at the end of the entire book that summarizes the chapter. I love the fact that there's loads of stats and stuff in there. I'm coming at this right from someone who requires money, but gets very, very bored when learning about finances and talking about investing. And yeah, for anybody that thinks that they've listened to this and is like, yeah, I probably should learn this stuff. Super accessible, real plain language, some great stories in there. You should be really proud of the work that you've done dude. I loved it so congratulations on getting that out.

Thank you Chris, I appreciate you saying that. It means a lot to me, especially for so many say it was not really interested in money, that means a lot and I do think Morgan's book is like kind of like everything I missed, Morgan. It's like oh yeah, someone asked today on Twitter, like who should I read first, you were Morgan, like read me and then everything I miss, Morgan's cup.

Fills in with you. Yeah, because I, behavior, it's hard to quantify a lot of stuff. And he's right, like, ultimately behavior is the most important thing, but if you can't quantify it, it's tough for me to write about that stuff. And that's what he does so beautifully. So I think we are kind of looking at the same issue in different ways.

And so it's interesting to kind of how we do that. And I love his book. I'm a huge fan of his, obviously, like, we're good friends, everything. So thank you. I've heard on the on the grapevine that he might have something else in the works as well. So whatever that's going to be is going to be fucking spectacular. My lips are sealed. That's all I can either confirm or deny. Dude look I really appreciate you. I appreciate your work. Where should people go if they want to find out more stuff about you online? So yeah my blog blog is of dollarsanddata.com.

So of dollarsanddata, all one word. You can also find me on Twitter at dollarsanddata. You feel free to DM me. My DMs are open. So I try to respond to everyone. I have no idea. I might get way too many, but anyone wants to DM me about anything. I'll try to respond.

Thank you. Nope. I love it, man. Thank you.