The Personal Finance Podcast - The Hidden Cost of Playing It Safe with Your Money with Ben Carlson

Episode Date: June 22, 2026

The biggest investing mistake isn't losing money, it's never giving your money the chance to grow. Ben Carlson joins Andrew to reveal the hidden cost of playing it safe, why volatility isn't the enemy, and how investors quietly sabotage their long-term wealth without realizing it. 👉 Join Andrew's FREE Masterclass The Portfolio Pyramid: https://event.webinarjam.com/q05p7/register/q05p7b65?webinar_id=24 What You'll Learn in This Episode Why the biggest risk for most investors is actually being too conservative How market volatility creates long-term wealth opportunities The hidden cost of waiting for the "perfect" time to invest Why diversification is still one of the most powerful risk-management tools How to think about risk differently in your 30s, 40s, and 50s The investing mistake that can permanently damage your wealth-building journey Why investor behavior matters more than finding the perfect portfolio How to build a strategy you can actually stick with through market downturns Lessons from the Great Depression, the Dot-Com Bubble, and today's AI boom Why "good enough" is often better than chasing the perfect investment plan Start Here Join the community built to help you master your money, stay accountable, and reach financial freedom. 👉 Try Master Money Academy FREE for 7 days today! https://mastermoney.co/join/ 👉 Join Andrew’s FREE Investing for Beginners Masterclass https://event.webinarjam.com/q05p7/register/0o8z9io?webinar_id=21 👉 Join The Master Money Newsletter where you will become smarter with your money in 5 minutes or less per week Here! https://expert-hustler-605.ck.page/6aa7bb9a79 Partner Deals Indeed → Get a $75 sponsored job credit http://Indeed.com/personalfinance Policygenius → Free life insurance quote http://policygenius.com Chime → Get more rewarding fee-free banking at https://www.chime.com/PFP Monarch Money → The all-in-one financial tool + Get 50% Off at http://www.monarch.com/PFP Shopify → Sign up for your one-dollar-per-month trial today at http://shopify.com/pfp Wayfair → Up to 60% off | MEMORIAL DAY WAREHOUSE CLEAROUT http://wayfair.com DeleteMe → 20% off with code PFP https://joindeleteme.com/PFP20/ Watch Next Should You Buy Into IPOs (SpaceX, Anthropic, or Open AI) ⁠https://youtu.be/e8r5h7RkOyo⁠  This is THE BIGGEST RISK to Your Retirement Portfolio ⁠https://youtu.be/7gXKEy66-bA⁠  Connect with Ben Carlson Website: https://awealthofcommonsense.com Podcast: Animal Spirits https://podcasts.apple.com/us/podcast/animal-spirits-podcast/id1310192007 Book: Risk and Reward https://awealthofcommonsense.com/2026/05/my-new-book-risk-reward/ Connect with Andrew Instagram → https://instagram.com/mastermoneyco Website → https://mastermoney.co TikTok → https://tiktok.com/@mastermoneyco X → https://x.com/mastermoneyco LinkedIn → https://linkedin.com/in/andrew-giancola-45027b340 YouTube → https://youtube.com/@mastermoneyco Question for you: What do you think is the bigger investing mistake: taking too much risk or not taking enough risk? Let us know in the comments below. Learn more about your ad choices. Visit megaphone.fm/adchoices

I think the biggest thing for most people is just making the worst possible mistake at the worst possible time. And that's, you know, pulling your money out of the market when it's down. I look at it as volatility is a feature dot a bug. Like, if we didn't have extreme price volatility in the stock market over the short run, I'm not sure we would get the high returns over the long run. The stock market has been at all-time highs like 7% of the time. So if you look at the other side of that, that means 93% of the time, you're kind of looking up at this high that it was there before and you're not there anymore.

I think perfect is the enemy of good with a financial plan. I think just good enough is probably fine because no one knows what the perfect portfolio is only with the benefit of hindsight. So I think you just have to get to the point where you have a strategy that you can stick with. It's good enough for you. And then you move on and you stop worrying about it so much. On this episode of the Personal Finance Podcast, we're going to talk about risk versus reward with Ben Carlson. What's up, everybody? And welcome to the Personal Finance Podcast.

I'm your host, Andrew, founder of Mastermoney.com. and today on the personal finance podcast, we're going to be talking about risk versus reward with Ben Carlson. If you guys have any questions, make sure you join the Master Money Newsletter by going to mastermoney.com slash newsletter. And don't forget to follow us on Apple Podcast, Spotify, YouTube, or whatever your favorite podcast player is.

And if you want to help out the show, consider leaving a five-star rating and review on Apple Podcast, Spotify, or your favorite podcast player. Now, what if I told you that the biggest risk you face, as an investor is not losing money in the market. It's not a crash. It's not a recession. But overall, the biggest risk is not taking enough risk in the first place.

Now, that's the idea of today's episode and today's conversation that we are having with Ben Carlson. Now, if you spent any time in the investment world at all, you probably already know Ben. Ben is the director of institutional asset management at Ritttholt's wealth management. He's the writer behind a wealth of common sense, one of the longest running and most respected finance blogs on the internet. And he's the co-host of the podcast, Animal Spirits. And he is, in my opinion, one of the clearest thinkers we have on what actually works when you put real money into today's market. Now, Ben has a new book out called Risk and Reward, which is how to handle market volatility and build long-term wealth. And in today's conversation, we are going to be diving into the conversation thinking about risk versus risk. We're going to talk about all the underrated ways to manage risk. We're going to talk about how to think about your portfolio if you're 30 versus how to think about your portfolio. when you're 50. We're going to go back and look at history and talk through how some of these historic events can teach us things about the market. In addition, we're going to talk through

today's market, how AI is restructuring the way that we think about the market, how we both are managing our portfolios, especially when there are people out there saying, hey, the S&P 500 is over concentrated. The top 10 holdings in the S&P 500 are overweighted. And we're going to talk about the practical application so that you have actionable takeaways from this episode. So if you're serious about building long-term wealth, this is an episode you do not want to miss. let's welcome Ben to the Personal Finance Podcast. So Ben, welcome to the personal finance podcast. Glad to be here.

We're so excited to have you here. And I want to kind of talk through a number of different things as it relates to your new book and kind of talking through the market. But before we dive in there, can you tell our listeners, you know, who you are and your experience with the market and some of the stuff that you've done in the past? Sure. So I work for Rittholds wealth management. I've been writing about the markets for about a dozen years now. And one of the reasons that I started writing and sharing about the markets was because I was just getting questions from my friends and family members. Hey, you're the finance guy. Help explain this stuff to us. And I thought, well, geez, everything seems so complicated, especially coming out of like the great financial crisis. People were really confused, didn't know where to turn. There was a real lack of trust for Wall Street at that point because of the financial crisis. And I thought, like, what if I just try to explain these complex topics in like plain English for just regular people? So they know what they're talking about.

So I started writing that was the audience I had in mind, right? It's my father-in-law. It's my mother. It's my sister and her husband. These people that, like, they're not in the world of finance and they need to understand it. So that's what I've been doing. And now we have podcasts, all this other stuff, too, to talk about this.

But I like trying to take complicated topics and make them easy to digest for anyone in the financial industry or outside of it. You absolutely do that. And I think the cool thing about your writing is it makes it simple and it's almost actionable. You can kind of read through some of the writings. that you have each week on your blog and some of the other stuff that we'll talk about here. And I think it's just really, really cool how you break it down and make it simple for investors

to understand some of these more complex topics, which I think is absolutely fantastic. And a lot of this episode, we're going to be talking about risk and reward. We're going to be talking about a lot of different things that comes into play with that. And I want to kind of dive deeper into that. So you say risk and reward are kind of attached at the hip. And this is something where I think the average investor may be misunderstanding this relationship right now. So do you kind of see that? Do you see the average investor misunderstanding kind of where risk and reward?

or attached? Yes, I like to say that like risk never completely goes away. It just kind of changes shape. Like no matter what stance you take, if you bury your money in your backyard, there's a risk to that, right? You could, it'll get eaten up by inflation over the long term. If you take a ton of risk in stocks, even if you get long-term returns that are great, there's still short-term risks that you have to deal with. And so my whole idea is that the whole concept of investing is really dealing with tradeoffs, right? I don't want as much volatility, so I'm going to have to accept lower expected returns. I want higher expected returns, but that means I'm going to have to expect, you know, bigger losses potentially in the short term and more volatility. And so it's kind of like

which tradeoff do you want and what's going to, what's going to eat at you more? Which ones those risks is going to get at you and cause you to have sleepless nights? And then it's kind of balancing. And the thing is that there's no right or wrong answer, right? Some people are more conservative by nature. And so I think a lot of it comes down to understanding yourself. Are you a person who can invest aggressively? And you can, deal with volatility. Some people have the ability to do that. They just have ice in their veins. Other people, like, taking too much risk just makes them miserable. It's kind of like debt, right? Some people just have to pay off debt. It, like, internally, they can't handle it.

Others are more comfortable with it. So I think it's about knowing yourself as much as anything when it comes to risk. Like, risk means different things to different people. I think that's a massive thing where the risk tolerance is a huge, huge impact for a lot of folks. And I think I remember, like early on when I first started investing, one of the things, for for me was I wanted to be really conservative. I didn't want to lose money. And I remember kind of thinking through, okay, well, what are some of the things that I can invest in where I won't lose money? And so that's kind of started me on my journey of index funds and ETFs and just being a long-term investor and kind of thinking through that process that way. And then as time went on, my appetite for risk

kind of shifted as I was in the market longer and I was able to understand kind of volatility and how the market is impacted based on some of that volatility. And so you have a really good framework here where you're kind of thinking through, okay, well, a lot of people say volatility is the enemy, But you kind of frame it as this is the toll. This is the price you have to pay. This is kind of the cost of doing business if you want some of those higher returns. Workplace chaos. You know the feeling.

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So if someone is listening right now, maybe this is a, you know, 30-year-old who is listening and they are just getting started investing, or maybe they have been investing for a while and they really just can't handle volatility, is there anything that you would explain to folks like that as maybe a mental shift or a framework shift on the way that they kind of think about volatility? Yeah, I look at it as volatility as a feature. Out of bug. If we didn't have extreme price volatility in the stock market over the short run, I'm not sure we would get the high returns over the long run. So that's the part of it being attached to the hip. And I think there's a few things you have to think about.

If you're a young person, your biggest financial asset is your human capital. So it's like your future earnings power. And so I think you have to think about that way that, I like to say that risk means different things to different people at different points of their life cycle. If you're a retiree and you're not going to have an income coming anymore, it makes sense to be a more conservative investor with part of your portfolio because you don't have time to wait out bare markets. you don't have new money coming in that's going to be invested. If you're a younger person and you have that salary coming in and you're putting your money in out of every paycheck, right? Every two weeks, when I get paid, money goes into the 401K or the IRA. Or if I get paid on a monthly basis,

that's when that money is going in for the contributions. And I think that makes it easier to kind of stomach those downturns when you realize, oh, you reframe it as it's a good thing because money is going in at lower prices and lower valuations and higher dividend yields. And that's the kind of way you have to reframe it is, I'm going to be investing when that volatility hits. I'm going to take advantage of it. It's not going to be a bad thing.

And then if you say, listen, okay, fine, I understand the volatility, but I still can't take it. Maybe I need to be in like an 80, 20 portfolio instead of 100% in stocks because I know myself and I'm going to freak out regardless of the knowledge. So I think that's another part of it too. And you talked about like you figured out that you could take more risk as you learn more. I think you have to kind of graduate to some of these phases sometimes. and get to know yourself better after you've done it because for some people,

you don't really understand how badly losses will impact you until you have real money at work to see it. Absolutely. And I think that financial education is a huge proportion of this. It's kind of like, hey, I know these market pullbacks are very normal. It is something where if the market pulls back 20%, I don't have to freak out. This is a normal part of the market cycle. And once you start to get that financial education going, it really does normalize it a little bit more for a lot of folks, especially for those out there who kind of freak out when there

is some pullbacks. And, you know, every time there's a pullback, I get flooded with DMs. I'm sure you do too or emails that people will just send out, hey, what do I do with my money or what do I do in the market? I think this is one of those things where we have to always calm them down and just help them understand, hey, this is something that is very, very normal when it comes to this process. Now, a lot of folks also along those same lines confuse risk with loss or when the market goes down, they feel as though they lost money. How do you kind of draw the line there and teach people, hey, this is more so one of those things where if you're a long-term investor, This is just part of, you know, the market cycle.

It is a really hard thing to realize that, like, you're going to be a long-term stock market investor, sometimes your portfolio, a piece of it's going to get, like, vaporized. And it's like, you have to kiss it goodbye for a little while. And so I think the stat I've given the book that since 1950, the stock market has been at all-time highs, like 7% of the time. So if you look at the other side of that, that means 93% of the time, you're kind of looking up at this high that it was there before and you're not there anymore, right? And your portfolio was at a high water market, and now it's lower. And yes, I think these things don't work on a set, you know, a set stopwatch.

But, you know, every three to four years there's going to be a bare market probably, right? Maybe once a year there's going to be a correction. And the hard part is when you're in a correction, you don't know if that 10% downturn is going to turn into 20% or 30% or 40%, right? And is this correction going to turn into a bear market? And is that bare market going to turn into a crash? That's the hard part. You can look back at history and know, like, oh, yeah, I would have bought that. Of course.

It went down X percent. That would have been easy. Like that was, of course I was a buying opportunity. But when you're living in it, it's hard to tell. Like, is this a wonderful buying opportunity right now or I'm going to get my face ripped off even more? And I think that's the hard part that you have to deal with is sometimes you have to be willing to sort of eat those losses for the long-term gain. Exactly. It's one of those things where if you look at it, you know, when you're in the moment, you really don't know what's happening next.

Where as you zoom out or when you look back like you were stating, I think it's one of those things where you can kind of see, hey, okay, I would have bought at this point in time. But when you're living in it, like if you're looking at it, like if you're looking at, kinetic currently. It is one of those things that is really tough to understand what's going to happen next, which I think is why it is so important to study history. It's why it's so important to understand, hey, those all-time highs are only 7% of the time, and 93% of the time the market has not been at those all-time highs. I think it's really important to kind of go through that process. And you kind of go deep into the book on things like the Great Depression. You talk about Japan in the 80s. You talk about the dot-com bubble and all those different areas.

Is there any, you know, really underrated lesson that most people have not learned, you know, about the history of some of these markets and things that you want people to take away from that? Yeah, one of the reasons that I like financial history so much is because when I first started out, I realized I don't have a lot of experience investing. I need to learn and level up here, especially working in the finance industry. I can't take part in a lot of these conversations because I didn't live through these things. And it's kind of funny because early in my career was the great financial crisis. And so I got a good tutorial pretty quickly. But I wanted to understand these things. And I think the one constant is, is the human nature element of the,

you know, things can swing back and forth between like fear and greed and euphoria and panic. And human nature is the one thing that takes those things really far. So, um, the market environments are always different, you know, there's different, not, people have more knowledge now today of the past. Um, but I think the one constant is human nature and that that's when, when things start going down, people tend to get nervous and freak out and, and things get more volatile and more anxious. And when things are going well, as they are right now, right? We're in a bull market right now. You have to temper your expectations and not get too far over your skis and really put your foot on the gas pedal. You have to understand that like these good times

are not going to last forever. So I think the real lesson about studying financial history is just the fact that there's always like a wide range of outcomes and you have to be prepared for a number of different scenarios. And you have to be aware that you're probably going to be surprised at times. Like the risk that comes is usually not the one that you're expecting. Is there any similarities that you see in today's market with some of the history that you looked at going back to, you know, some of these markets that we have seen in the past where this is one of my favorite things to look at, too, is just the historic, you know, happenings of what has happened in the market over the last hundred years. And I find as though the more I study that stuff, the more easy it is to stomach things like we talked about with this volatility and or if there are pullbacks, it's a lot more easy to stomach that stuff when you look at, you know, what has happened in history. and how much worse it could be and some of those things that are just very normalized once you understand this stuff. But is there any comparison that you've seen in our market as of late?

Obviously, we've had just a really strong bull market over the course of since 2008, 2009. Sure, we've had some pullbacks with COVID and some other areas. But have you seen any similarities of some of the historic stuff that you've looked at? Yeah, it is funny. That's one of the things to understand is that these bull markets can last much longer than you think. And the problem is that there's like these secular bull markets that can last for decades sometimes and then cyclical ones where you have kind of a give and take and a pullback here and there. I think the obvious comparison right now would be just anytime there's technological innovation like this and people get really excited, right? So we're living through an AI boom and all

this different, these changes in technology. It happened in the dot-com bubble. It happened in the roaring 20s where there was all these new things that people, like we had the automobile and people had refrigerators for the first time in some of these things where people got so excited about what the future brings. And that's, those are the times when, you know, people are, feeling great and people are feeling good and you start extrapolating the future. And it's like, oh my gosh, these returns have been amazing. They're going to continue forever, right? At the height of the dot-com bubble, there was a poll where they asked people like, what do you think future returns for the stock market are going to be in the next 10 years? And everyone said, you know, I don't know,

16, 17 percent per year because that's what they've been getting for like two decades. And then, of course, the next 10 years, the stock market went nowhere and you had two huge crashes. And I don't like to use history as a blueprint in terms of like, all right, this happened before. So the next step from here, we've got a good bull market. Now there's going to be a crash. It's never quite that easy because you said over the past 100 years, how many instances can you look back to? Like, you know, the sample size is three or four or something, right? So trying to extrapolate what happened in the past and use them as rules, I think is challenging

because things that have never happened before tend to happen all the time in the market. But I think it's helpful to give yourself a baseline and then like a range of outcomes, right? Okay, I can't expect the stock market to go up for 15% per year indefinitely, right? That seemed to be, so maybe I should temper my expectations a little bit. That doesn't mean the stock market is going to zero tomorrow, though, right? So I think you kind of have your baseline and then you try to think about what the outliers could be and then build yourself a durable enough portfolio or have like the intestinal fortitude to hold through those bad times whatever they may come. It's funny. You mentioned kind of the difference in rates of returns that people are kind of anticipating or expecting now because I remember when we first started to kind of create content online and we started to talk about investing content on social media and or, you know, everywhere else in this podcast and everywhere else. We used to get emails and comments all the time when we would talk about an 8 to 10% rate of return where people would say that is way too high. You're never ever going to be able to get that. And now people are saying that is way too low. And it's interesting to kind of watch everybody shift the way that they think through this stuff. And it's really,

one of those indicators that I use all the time, too, to kind of see where the market is and where people's heads are at this point in time. So it's very interesting. So in our current market right now, there's a lot of different options that people have. Obviously, like at heart for me specifically, I'm pretty much a passive investor. I buy individual stocks, but for the most part, it's index funds and ETFs for the majority of my personal portfolio. But there are so many other options that investors have out there now that kind of make it easy for them to invest with leverage or with crypto or with options or all these different things. Is the overall risk for the the average investor right now different than what it has been historically because they have all these

options? It's interesting because it's like a double-edged sword. I think there's never been a better time to be an individual investor. In terms of the products you have available, the services, the strategies, you can buy the whole stock market for like two or three basis points now, right? It's insane. You can buy it on a brokerage for free. There's no commissions, right? When the first index fund was launched by Vanguard in 1976, there was an 8.5% front-end sales load. So you're, you're, Yeah, it's nuts. So you're paying $8.50 for every $100 you would, just to invest the money. It went away after a few years.

But now the barriers to entry for the stock market have been completely knocked down, right? Technology is improved. The costs have come way down. But the flip side of that is now there's so many strategies. And you mentioned there's option strategies or these buffer strategies. There's crypto. These strategy and the new ETFs are coming hard and fast. They like to throw a bunch of stuff against the wall, see what sticks.

Hey, this one got a bunch of money. let's double down there, let's close the other ones. And it's easy now because you have these like tax-efficient strategies, but the problem is it's never been more tempting to change. Like, oh, man, do I need some of this? It's like you're at a buffet and it's just never ending, right? So I'm going to get a little bit of this on my plate and a little that. And that's, so now the problem has gone from high barriers to entry to invest in high

cost to low barriers, entry and low costs. And also like, do I need filters on this? Do I need some limitations here? And that's where I think people get in trouble. that's where the behavior is a problem is people thinking they need to invest in everything and not having any constraints on their process. Is there anything you've done in your personal process that you put filters on just kind of, you know, blocking out the noise?

Obviously, you're looking at market stuff all day, every day. So you're hit with probably even more, you know, temptation to kind of dive into some of this other stuff than most people are. Is there filters that you put on your own portfolio that have made sure, hey, I'm going to stay in my lane, I'm going to stick to my investment plan? Yeah, it's funny. I think you have to be on one end of the spectrum. So I'm at this, I'm at that one end where I'm paying attention to all this stuff. so it doesn't impact me as much anymore.

So there was like the, there was the, in the Avengers movie, they asked Bruce Banner turns into the Hulk like, hey, how did you figure out how to control your anger? He said, I don't control it. I'm angry all the time. And that's how I don't turn to the Hulk all the time. So people in finance, I think, pay attention to this stuff. It's easier to ignore because you're in it all the time. I think the other end of the spectrum is the people who really do just ignore the stuff,

right? The worst place to be is probably the middle ground where like I have like a little bit of knowledge is a problem potentially. And you kind of are dipping your toe in this and this and not. understanding, you know, it could be a good investment, but maybe it's not the right investment for you or your risk profile on time horizon. And I think that's where you have to understand. And so I love to tell investors that they should have a list of things, of structures, of products that they just will never invest in. So it could be, I'm never going to invest in anything that has a fee above this

amount, right? Or I'm never going to invest more than six ETFs in my portfolio. I mean, you have to have some sort of constraints, I think, to guide your actions these days. Again, even if it is, it could be a good investment for someone else. Maybe for you it's not the right investment. Or you have a certain portion of your portfolio that, hey, any more than 10% of my portfolio for picking stocks or putting crypto or whatever it is, like that's, when that bucket gets full, then I'm done investing in this stuff. I think you have to have those filters in place.

Otherwise, you can just, you know, spin your wheels constantly and keep changing your portfolio and never be satisfied. I couldn't agree more because otherwise you're just going to go for the next shiny object the next thing that kind of pops up, especially when you are in that middle ground, just like you said. For example, like I know a lot of people were kind of jumping into crypto, and then all of a sudden those same people are kind of jumping into gold as of recent, and then the same people are jumping into some of the AI stuff, which I think is just so interesting to kind of watch us.

So you have to have these parameters set up. And if you are prone to kind of jumping into some of those things, maybe you have a small percentage of your portfolio that scratches that itch that allows you to go forward with that, and everything else is kind of for your wealth, building, long-term retirement, that kind of stuff. But there's a bunch of frameworks that we could think through. and I think that's really, really powerful lesson for sure. Private credit is also a big buzz in today's market over the course, especially over the course of the last 18 months. I've seen a lot more folks talking about that. Do you see this as something that is a buildup similar to 2008? Or you see this

as a totally different market and a totally different way that we're looking at this? I think it's a different thing because that was a huge credit cycle that came, where everyone was so over leveraged. And there's not as much leverage in the system now as it was then. I think the biggest lesson from the private credit thing, and what I try to kind of talk about in the book is the importance of matching your assets to your liabilities, right? Your investments to your time horizon. And I think that's the place where people have gone wrong

in the private credit thing is like it's an asset liability mismatch. So they tried to take these illiquid loans that really, you know, these companies are holding and should be, if you're an investor, you should think about these assets holding for five, seven, maybe 10 years, right? You're holding these loans until maturity. You're not like trying to jump in and jump out of them because they're a liquid. They don't trade on the exchanges like the more liquid fixed income like a treasury or something.

What you had is a lot of these advisors put their clients into it. And at the first sign of trouble, they said, all right, that's it. Tap out. Give me my money back. And it's like you're not supposed to put your money in these things and get it out 12 months later. You're supposed to hold them to maturity and get the money back. And so I think that's where people have gotten in trouble with this. Obviously, it's harder to know what's going on in these phone.

because it is private, right? I don't have like a look through to see what's going on any of them individually. But I guess the good news is that it's not part of like the banking system anymore, right? It's these, it's these private equity managers and private credit managers that are managing them now. And if something goes wrong, they're on the hook, not like the bank that has your deposit dollars. So that's why I would think that this isn't going to be like a subprime loan type of thing. But yeah, it really, it's on like the advisor and the finance person to really talk to their clients about, like, does this, do you have the right, you know, time horizon for investment like this? Can you hold it out for the long term, even if you get worried

in the short term? Exactly, because at times you can get your money locked up for decades, depending on what that investment is. And so having the ill liquidity, I think, is going to be something that a lot of people need to evaluate, especially long term, as they start to think through some of this stuff. If you've ever felt like your bank is working against you instead of for you, you're not alone. Between overdraft fees, monthly fees, and just trying to access your own money, it all adds up fast. That's why Chime is changing the way people think. Chime offers fee-free banking built for you, not the bank. That means no monthly fees, no overdraft fees with SpotMe and access to thousands of fee-free ATMs, so you're not paying just to get your own money. And when you

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hey, is the S&P 500 overweighted? Is there too much, you know, in these AI stocks? The last I looked, I think it was 41% of the top 10 holdings or, you know, the top 10 holdings are 41% of the S&P 500 might even be a little higher as of today. And it's one of those things that, you know, a lot of people are asking themselves, well, am I diversified if I invest in something like an S&P 500 index fund? or is this something that I should look to kind of diversify out of and do some other things with my money? What do you think about that with a lot of portfolios in the S&P 500 or even if you look at a total stock market index fund? A lot of times those portfolios are also, you know, weighted 35% in the top 10 holding. So what do you think about this and is that actually diversified and should investors do anything about that?

Yeah, it's interesting. That's certainly been a topic of conversation for probably the last decade or so. It's like, oh my gosh, it keeps getting more and more concentrated. People keep thinking like, this is the end. This is how is it can go and. going higher. I think one of the beauties of investing in index funds beyond the simplicity and the low cost is that you cast kind of a wide enough net and the winners rise to the top, right? You don't have to, you're not forced to pick the winners yourself. You let the market

pick them for you. And I think that's great. And if you look at just the raw numbers beyond on it, a handful of stocks make up the majority of the gains over the very long run. So I have this stat in my book that over the last hundred years, like 90% of the gains in the stock market came from like 4% of the names. So the, the, the, returns themselves do tend to be concentrated. Now, on the flip side of that, there have been times where that concentration risk can lead to to have a poor outcome, right? After this, we got some concentration in the dot-com bubble in the 90s, the next 10 years were pretty bad for the S&P 500. The good news is it's never been easier to diversify, right? So if you are worried about concentration

and you don't want to have all your money in an S&P 500 index fund or a total market index fund, you can own small caps or international stocks or value stocks, right? You think, oh my gosh, these tech stocks are so overvalued. You have a value ETF or a quality ETF or dividends or something that's more boring and that has been kind of left behind, right, and hasn't had as high of returns. And so I think the ability to diversify now is also easier than ever. And so when people say, okay, fine, what do I do? One of the simplest ones, I think, is just to look at the whole world stock market, right? The world market cap right now is roughly, 65% U.S. stocks, 35% international stocks. And I think you can use that again as a baseline to say,

do I want to be heavier towards the U.S.? Or heavier towards international? Or do I just want to stay like what the global average is? And so I think using that as like a starting point, I also think like a target date fund is a great benchmark to have. You look at a target date fund from Vanguard or Schwab or Fidelity and you match it to your potential retirement year, right? I'm going to retire in 2065. I look at what that portfolio is. And I look at it. And I look at how they diversify and I say, man, they have a, you know, they have this much in REITs and they have this much in small caps and this much in midcaps. That's the baseline benchmark. Like, can I do better than that? Or can I use that as a jumping off point? So I think that's a great place for people to start

when they want to think about how to diversify is looking at some of these other benchmarks. And it doesn't mean you have to be exactly on them, right? But you could use them as a starting off point to go, oh, that makes sense to add someone that to my portfolio. I'm going to do this, but I'm going to underweight it a little bit because of these reasons. And so I think that's a, that's a good starting point for people. And I think that's a, and I think that's the beautiful thing about today's day and age is it is so much easier to diversify into something if you want to kind of go to that direction. One of the things I look at a lot of times is I'll go look at the top 10 holdings and say, okay, I'm looking at these top 10 holdings. Are these companies

that I want to hold? If yes, then I'll look at the top 10 holdings of, say like an international fund, for example, and I'll say, okay, which one would I compare between the two? If this is something that I really want to diversify out of, am I okay, kind of adding more of some of this here? And then you kind of can go into diving in even deeper. And a lot of times, when I look at the U.S. holdings, it's just absolutely incredible what some of the companies are in those holdings. And so you look at those top 10, these are just some of the largest companies in the world. They are the largest companies in the world when you look at the S&P 500. And so it's just kind of cool to go through that process. But diversifying, like you said,

you can add emerging markets. You can add all these different cool things that I think are are really, really important for people to look deeper into. When someone's thinking about their risk, though, like let's say, for example, someone right now is listening and they're in their 30s and they're starting to kind of build wealth and they're building their portfolio, you know, they're in, you know, working on their career, all those different types of things. how do they think about risk differently from maybe someone in their 50s who is kind of getting to the point in time where they're approaching retirement age and they're going to getting closer to that? Do you have different parameters around that or is it just based solely on risk tolerance? Well, I think part of it is like the size of your portfolio. So I've been thinking about this too, that there's a lot of investment advice out there for people and young people and old people. Right. If you're young, it's like, hey, just keep funneling your money into the market, make your contributions. Don't think about it too much. Don't tinker. Let compounding take hold. Like that it's pretty standard advice.

For older investors who are about to retire, it's kind of like, hey, you need to probably start diversifying and be more liquid because you don't want to have to sell your stocks if they fall right when you retire. You want to have some liquid cash savings or fixed income or something that's going to keep you. And I think it's interesting that like the more middle age component is like you might have a foot in each camp, right? And it's like you now have maybe a little bit more money where if you have a bare market, it's going to sting a little bit more. So it's not as much about the percentage decline.

in the market anymore. It's about like the dollar decline, right? If you lose, you know, 50% of your money on $10,000 invested when you're young, that's $5,000. But if you lose 50% of your money when you have $500,000 now on your 401K, that's $250,000, right? So it's kind of changing that mindset. And that's why you think like, oh, I've made some nice gains. It's been a really great bull market. I'm probably doing better off than I thought I would when I set my return expectations, When I first started doing my own personal financial plan, I did some simple Excel stuff, and I put in, yeah, here's my expected returns, and I did a range like this would be the high end, this would be the baseline, and this would be the low end. And the returns have been better than I probably even had on the high end, right? Because the market has done so well. So I think you might look at it and go, man, I'm doing so much better than I even thought I would have done five, 10, 15 years ago. Does it make sense for me to get a little more conservative and not try to like get rich twice or whatever, right? Not with the whole portfolio because he's still got a long time ahead of you. even if you retire, you know, you have three, four decades maybe. So I think it's just about trying to think through some other scenarios of having more liquidity and more flexibility.

One of the things I hear actually from people who are kind of reaching middle age is, man, I funneled all my money into retirement accounts, which is great because I get the tax deferral and it's easy and I don't have to think about it and it's kind of locked up. But I'm realizing like I might want a little more flexibility. So you start shifting like more money into a taxable account because hey what if I want to retire early and I can't touch those retirement accounts now I got to have more flexibility more liquidity even if I don't get the tax deferral maybe it makes more sense for me to put more money in the brokerage now so I think those those are the kind of decisions as you get into your 40s and 50s that you start thinking about and I

think it's good for people in the 30s to start thinking through those things too so then you're not you're not having any regrets right that's a great way to think through like what should my next action steps be we'll talk to someone 10 years older than you what do they wish they would have done maybe 15 or 20 years And you try to plan for these things ahead of time so you can slowly leg into it instead of trying to do it all at once. Exactly, because it really is just planning it out long term. And one of the things we teach people on this show is I want you to run your retirement number calculations on a yearly basis, even if you're in your 30s and 40s. And the reason for that is because we're looking at our spending currently, but we're also trying to figure out,

okay, as these things adjust year over year, we can make these micro adjustments to our portfolio or the way that we're investing our dollars. Whereas if someone is doing this and the first time they do this is that 48 years, old, all of a sudden they are going to try to rush to kind of get everything in the right places. So if you start this early on and you just start to think about this stuff and adding money to your taxable is a great example here because most people, when they stuff money into retirement accounts, a lot of times they don't have that flexibility. And if they're trying to play catch up in their taxable and bridge, if they want to be able to retire early, it is a much more difficult thing and they have to work way harder than they originally anticipated than if they just started

kind of earlier on in the process. So I love that. And I think this is really, really important for most people to note is, hey, get started as early as you possibly can. Just start thinking through this stuff. It doesn't have to be perfect. You can make adjustments as time goes on, but just do the best you can right now so you can get the ball rolling on that. So if someone out there is listening and that, you know, they have a 30 year plus time horizon, what do you think the biggest risk overall is for someone like that when they are planning, you know, thinking through their retirement or just long-term investing? Is it something that they maybe have not, you know, thought through fully? Or what is the biggest risk for someone with a longer time horizon.

I think if I think that's, I'd like to say that a longer time horizon is like the ultimate equalizer. I think it could do away with a lot of mistakes. So I think the biggest thing for most people is just making the worst possible mistake at the worst possible time. And that's, you know, pulling your money out of the market when it's down or something or not invest. I think one of the things we've learned for this bull market that's now approaching almost

two decades since the great financial crisis is that missing out on something like this because you were too scared to invest, right? because in the 2010s, a lot of people were trying to scare people out of the market and say, like, just wait, another financial crisis is coming. It's going to be even bigger. Just wait. So I think if you make one of those big errors where you're just, you're not investing your money, you're too conservative, you're pulling it out at the wrong time. I think a long time horizon in the stock market can iron out a lot of those mistakes for you. I think the other mistake a lot of people make when just getting started is they try to make it perfect. And I think perfect is the enemy of good

with a financial plan. I think just good enough is probably fine. For your portfolio, for your, you know, assumptions and your expectations, all these things, you don't have to have the perfect asset allocation right away. You can tinker a little bit and change it. You can learn a little bit as you go and make changes. And I think just the idea that you have to be fully optimized, because no one knows what the perfect portfolio is only with the benefit of hindsight. So I think you just have to get to the point where you have a strategy that you can stick with. It's good enough for you and then you move on and you stop worrying about it so much. Perfect is the enemy good. I love it. Yeah, 2% here or there is not going to change very,

you know, gosh, should I have 3% more in this small cap fund or 3% more in this Emerging Markets Fund? It's like if you're getting down to the point where you're splitting here, is you're probably, you've probably done enough and you can kind of just like be okay with it. Exactly. And I think it's one of those things consistency matters most over anything else, is kind of getting those dollars invested continuously doing that over time and making sure that you are kind of moving forward with your plan is that the biggest thing overall, as long as your plan is good enough, it's going to get you results that you are looking for. And I think that's the most powerful thing here. You've written for years about investor behavior

and the real alpha in a lot of the markets is investor behavior. This is one of those things that I think people undervalue at times is kind of looking at behavior and psychology and some of those things that truly, truly matter when it comes to thinking through the market. So when it comes to that, is there things, you know, in your own investing where you've had to fight against maybe your own, personal behavior or your own kind of money psychology when it comes to your investments. It's interesting. For me, it was more on like the personal finance side of things. The investing thing for me always came kind of like the buy and hold, Warren Buffett, John Bogle, like long-term investing for whatever reason when I first started reading books,

that clicked to me. Like I read a few like trading books, you know, and I'm like, that, that's just not my personality. And I think that more than anything is probably one of the most important things when you're young is figuring out like finding a philosophy that matches your personality and your emotional makeup. So that the the whole long-term investing side of things always kind of made sense to me. I mean, part of it for me is I get tempted to like, you know, should I dabble in this and should I dabble on that? So it's kind of keeping a funnel there. But for me, the personal finance side of thing was going from being this person who was very frugal and save, save from my whole 20s. Like I really bought into all the personal finance books of saving and compounding and front-loading

but then it was hard for me to, you know, turn around and then also enjoy some of the money and have some more balance. And so obviously for some people, they have no problem spending money and they have a hard time saving. Other people, I've encountered this a lot with my readers and people that we work within my wealth management practice, they've developed great saving habits, but then when it comes time to actually enjoy the money, right? They've built the money to their goal. I had this number in mind. I've gotten there. Now it's like, okay, turn around and spend the money on what you were planning for and it's like, oh boy, that's really hard to do. And so that's something that I had to change my mindset on. And it's not something that you do, right? Like,

Jerry Seinfeld has a joke that, like, you don't tip a Coke machine over on the first push. You have to, like, get it rocking back and forth a little bit first. I think you have to, like, slowly ease into that, too, just like you ease into your savings rate and all those things. I love that because I think it's a really important thing that, you know, a lot of people come across where I think of that all the time. Like, you hit to the point in time where, you know, you get to, you know, actual your retirement number and you have to start spending those dollars and you start to think through that process and that's got to be a difficult switch to kind of turn on, especially when you're in accumulation mode for decades and decades and decades and all of a sudden now you have to

enjoy the money. And I have a really good friend who's a wealth planner as well. And he was kind of saying, hey, a lot of these folks, when they have their money in a Roth and folks have that personality, many times it's really hard to get them to pull their money out. But when they have something like in a 401k where they have to start pulling these RMDs down, all of a sudden that forces them to actually have to spend the money and enjoy some of the money there, which he says sometimes I like when those folks have money in a 401K just because those RMDs kick in and it makes them have to spend those dollars, which I thought was just an interesting side to the psychology of that. But I think what you struggle with is what a lot of folks do. It's a lot of, you know, thinking through

some of, you know, the personal finance side and kind of how to manage that psychology is massive, which is why it is one of the most important topics to kind of talk through. So a lot of folks out there who are too conservative. Maybe they start off early and they're kind of investing their money. maybe they have it at a target date fund and they're kind of, you know, investing those dollars towards maybe their target date retirement and there's there's a lot of bonds in their portfolio, even when they have, you know, decades and decades for this money to compound over time. Is this an underestimated risk, especially for younger folks? Is this something that they need to kind of make sure that they are thinking through

and looking at the risk when it comes to being overly conservative in their portfolio? Yeah, there probably is like this idea of diversification in some ways. Like you're too diversified and like you're making things too complicated. I think that's a possible. And that is one of the things that people say about target date funds. Like if you pick the number, like maybe in your 20s, you don't need 10% of bonds. Maybe you're 30, you don't need 20% in bonds. So I do think it's, again, kind of a baseline.

And you have to figure out if I'm going to be in target date funds and I want to get more aggressive, maybe I add 10 years and I go up the line, right? Or if I want to be more conservative, I take 10 years away. So I should be 2060, but actually I'm 2070 or should be 2060. Or should be 2060. So, yeah, I think those target date funds are not perfect by any means. means. And actually a lot of advisors kind of talk down on them, right, and say, like, oh, target date funds, you don't have the chance to pick your allocation and sometimes the allocation is too conservative. I like that they have them as a default option in 401K plans because it's much

better than the alternative. In the past, people would put all their money in like a stable value fund, which is essentially a money market. So the fact that we have target date funds, I think is a huge leap forward, but it could be something that you graduate from. You're all right, I got, I built up to a place where I want to be in the 401k. Now I can diversify between, you know, the S&P 500 index fund and the small cap index fund and the international index fund and I kind of can create my own portfolio instead. And I think that's what's great about the targeted fund. It's a great starting point and learning tool for having a jump off point to then, okay, now I'm going to do it myself.

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Go to Shopify.com slash PFP. That's Shopify.com slash PFP. When it comes to you kind of thinking through and when you wrote this book and you kind of went and dove into history and you dove through a lot of the things that are similar to kind of, you know, historic events and the markets that you have seen over the course of the last couple of decades, has that changed the way that you look at your own portfolio? Have you shifted your own portfolio or is it, you know, something where you stuck to your same investment plan and it's been the same for for a while now.

The one thing for me, and it's probably been to my detriment this cycle, is that I just, I look back at history and I think one of the best protections that you can have, one of the best risk management tools is just diversification. And I think that's what you mentioned before about people being worried about concentration in the market. I think the other side of that is people going, why would I ever own anything else? And why would I not just have all my eggs in one basket and put it all in the S&P 500 or like even more concentrated. I'm going to put it all in the NASDAQ 100. So I'm just investing in tech stocks. Like, why would I ever invest in anything else? And to me, that that level of concentration is something that I don't ever want to be stuck in. And I think

diversification is the idea that you like give up on the chance to swing for the fences, but you also take away the idea that you're going to strike out. And so you're always having to apologize for something in your portfolio. Something in your portfolio is always an eyesore if you're diversified enough. But I just, I've seen too many times where any sort of asset class, any sort of strategy, any part of the market can go through, you know, 10, 12 years where it goes nowhere. But then there's all these other pieces of the portfolio that can pick it up. And that's why, for me, diversification is the thing that makes the most sense as a risk management tool. Even if there are times when I go, oh, man, I really wish I didn't have this in here. I wish I would

have just gone all in on that, you know? That's the hard part with it. But the other side of diversification is like you can you cast a wide enough net where the winners are going to be there so like the last year emerging market stocks are up like 55 percent and the s&Ps up i don't know 30 percent or something and so that's the one thing about diversification is like you never know where that next winner is going to come from and i find that you know the older i get the more i am thinking you know i think one portfolio is diversified and the older i get the more i say hey this is not diversified enough and i want to add in some different assets that kind of you know increase that diversification especially when it comes to kind of index funds and ETFs. You know, when I was younger, I felt as though, hey, the S&P

500 is diversified enough. It's the 500 largest stocks. And then there's other, you know, different funds that I tend to add in more as I age, which I think is interesting to over time. So it's one of those things that, you know, as you start to live through the market, you kind of see shifts in the market. I think that's where a lot of folks just learn more and more and they start to adjust their investment plan accordingly, which I think is really, really cool. Is there any piece of conventional financial advice, whether it's in the market or even personal finance that drives you crazy? Is there anything? that you absolutely hate that's out there. Oh, that's a good question. Yeah, there's a lot of it.

Well, I guess I'll start with the market thing. And I probably was guilty of this too. I used to think when I first started writing that there's one way for everyone to invest. Like if you don't have your money in like just this low cost indexing, Boglehead way of investing, what are you doing? But now that I've worked with more people and I've talked about people that I realize that there really isn't like a perfect way for everyone to investors. There's different paths to success. It's funny. I think that there's, There's a number of different ways you can be successful as an investor, but only a few ways that you can be unsuccessful, right?

The mistakes are pretty common among investments. But I've come in contact with people who have made money investing in real estate. I know people who would make money investing in individual stocks and people who have made money investing in private investments and all these different things. There's a lot of different ways to get to the same end point, I think, and you just kind of have to figure out what works for you. Again, the thing is not confusing your own risk profile on time horizon for someone else's. and I think that's something that I have changed my mind about over the years

is just that there isn't just this one way for everyone to invest. I think there are some people who still believe that way. Like if you don't invest like me, you're an idiot. And I don't think that's really the case. I think there are other ways for people to be successful, even if it's something that you couldn't stomach or you don't really, you can't really wrap your head around. I couldn't agree more.

I think that's one of the most powerful things for people to understand is, hey, just because someone else does it a specific way doesn't mean you have to. And I think that is kind of the way that I've seen across the board. like you said, I've seen people do it with real estate, buying small businesses, from investing in the market, doing it with options. There's so many different cool ways to build wealth. You just have to understand what you're doing and make sure it fits that risk tolerance like we've been talking about this entire time, which I think is really, really important. All right, Ben, I want to shift gears here really quick. I'm going to ask you just a couple of questions that we ask a lot of our guests on this show before we wrap up the episode. So I want to see what your answers are on some of these. So what part of your work or life makes you come alive? Oh, right now for sure, it's my kids. It's my kids are.

are right in the sweet spot where like nine to 12 years old. I have nine-year-old twins and my daughter just turned 12. And that's one of the cool things for me is just like all the worries about myself go to them, right? And it's, I care less what people think about me and worry. I have way less anxiety about me and all my, all my anxiety is shifted towards them in a good way. So anything I get to do with my kids, because I know at some point they're going to be teenagers in the blink of an eye and they're probably going to say, see you later, dad. We're out of here. spending time with my kids as much as I can. That's such a powerful thing.

And I think that's, I'm right behind you. I got 7, 5 and 1. So we're like kind of, the 7-year-olds kind of get into that point in time where I see, you know, 9 to 12 is that range where it feels like that's the before they get to be teenagers is the range where you really want to make sure you're cherishing all every single moment. So that's really, really important for sure. Yeah. Someone told me one point, hey, listen, you have like, this is when they're younger.

You have 12 more summers with your kids before they go to college and they're gone forever. It's like, oh, my gosh. So I really try to make use of the time. time. It's so crazy to think about it. It goes by so fast and I just feel as though like it's just, it felt like my first born was just born yesterday. That's, that's, that's, that's, such a powerful lesson. What is your biggest fear when it comes to money? It's funny. I don't really worry about, like, running out of money or anything like that. I guess my biggest fear is just that I misuse it and I misallocate it. And I'm not taking full advantage of it. And, like,

you, I think that, like, every dollar should have a specific job or goal. And I just, I think that, I, I think that most people should have, occasionally they should have this feeling like, oh my gosh, I'm saving too much money. I should be enjoying it more. And then sometimes you think like, oh my gosh, I'm enjoying it too much. I can't believe I spent that much on vacation. I need to save more. And I think you need to like go back and forth those ways. So that's kind of like, I'm on each side of that boat. Like sometimes it's like, oh my gosh, what did we just spend on spring break? You know, what did we? I can't believe we spent that much money for a trip. And then the other side is like, oh my gosh, I'm saving all this money. Why am I not enjoying it? So I go back and forth between those two fears. But I think it's kind of good as long as it's in a tighter tighter window, but those are the kind of things that I go back and forth on constantly. Am I saving too much? Am I spending too much? And I want to be in both of those sides just like in an equal way, I think. I love that. That's exactly the things that I go through too, which I think is very, it's very interesting.

How do you plan to level up your finances this year, if anything? Yeah, you know, I think one of the things as you get, and I think one of the personal finance tropes that's been used over and over again is like avoid lifestyle creep. And I agree that to a point, like, you can't, it doesn't matter how much money you make if you're not keeping some. But I think that like as you make more money, as long as you keep a constant savings rate as a percentage of your income, you should spend more money too, right? And so I think part of leveling up is like finding those ways that you want to spend money, right? And, and treating yourself in some ways. So that's something where I've tried to kind

level up on is you know when I was growing up my parents never like to spend any money on us on like new shoes and clothes and stuff it's like whatever we have you're fine with and now that I'm older like I like buying some material possessions like that like even though I'm told like material possessions are never going to make you happy like sometimes that stuff does make you feel better about yourself and so I think sometimes you have to figure out but you just have to figure out what what parts of your life make sense like my wife and I don't like driving luxury vehicles we don't like going out to super nice restaurants. Well, there's other stuff that we're plenty happy to spend money on. So I think you have to figure

out like the right, you know, spending dials or whatever that make you happy. It's finding those things that you truly value and making sure that you kind of spend more on those things. And you can cut back, you know, on some of those other areas. I think that's one of the most important things. The skill of spending is a lot harder than people realize. And I think that's one of those things where you really got to

once you master that, then you can kind of get closer and closer to living the life that you want using money as a tool instead of it, you know, running your life. So I think that's a, that's a, That's a really important list. I love that. What is the best money advice you've ever received? That's it. The very first money advice I ever received from my father was never go into credit card debt. Always pay off your balance. And he told me that when I was very young. It's one of the only pieces of financial advice my dad has ever given me. And that's always my, like, number one rule of personal finance. I love that. Just paid off. No. And it's always stuck with me. He's told me at a very young age, a credit card bill came in the mail. He said, Ben, just so you know. every month, pay off the tire balance. I don't care. You never carry credit card debt.

That's perfect. The last one's my favorite. What does wealth mean to you? Yeah, I think wealth to me is about having a rich life. And it means having enough money to sort of have comfort and convenience and spend time with like the people that you love and not be not burdened by it. One of the quotes that I always come back to, this guy named Nick Murray, who's an investment author, says if you're still worried, you aren't wealthy. And so to me, wealth is like getting to the point where you're not worried.

You're not... Money doesn't bring you trouble, right? It's not a burden. And I think that's the thing with wealth is getting to the point where you're not worried about money anymore. If you're still worried, you're not wealthy. I love that.

Well, Ben, thank you so much for coming on here. Where can people find out more about you, your book, your blog, everything else? Yeah, Wealthofcomonsense.com. You can sign up for my newsletter there in the book, risk and reward. Out now anywhere you find your books. I actually read.

the audiobook too. So you can hear my voice if you want to. Awesome. Fantastic. We'll link all of it up down below, including your podcast and everything else. So then thank you so much for coming on here. We truly appreciate it. Thanks, man. Appreciate it.