Financial Expert: The MOST CONTROVERSIAL Investing Myths That Cost You Money! | Ben Felix

There is a lot more to a good life than a higher income and more wealth. A good life is subjective, [music] but there is lots of research on what does and does not tend to contribute to good lives for most people. >> You do manage around $8 billion worth of assets. [music] What would you say is a widely accepted belief that's actually going to make you poor? >> Picking stocks and I think that's probably on [music] average detrimental dude. God, >> who should buy individual [music] stocks? I honestly don't think anybody >> Liupold make the same mistake investors in South Korea make too much [music] leverage. >> I would probably stop checking my portfolio five times a day. >> I would stop dabbling in individual stocks and covered calls. The costs of trading options are [music] exorbitant. >> Is it possible though that we can continue to see these 10 to 15% returns [music] every single year? We are very close to a recession and I'm worried about something worse than [music] a recession. >> So, what's the downside of saving too much money? >> Uh, well, >> Ben Felix, thank you so much for coming on the ice coffee hour. >> Thanks so much for the invitation. >> So, you're the chief investment officer and portfolio manager at PWL Capital with over $8 billion in assets. I have to say, I've been watching you for the last 9 years on YouTube. I think you're probably one of the most sensible people when it comes to investing, early retirement, saving money. What's the best investment you've ever made? >> Two two things. One is myself. Uh, I I went to university, got a degree in mechanical engineering, did an MBA with a finance concentration, did a whole bunch of financial certifications, and doing all that stuff allowed me to get the job that I have and and progress with PWL with the company that I'm that I'm with and create content and all all that stuff. So, that's I mean, in terms of return on money, that has been by far the best investment. If I had not done all of that education and put in the time doing content, all that kind of stuff, I would have would have had a very different outcome. I know there's an outcome bias here, like I I have been successful in a lot of ways. So, it's easy for me to say, well, if you work hard, you can do the same thing, which is not necessarily true, but I do think that I put myself in a situation where I was able to get to an extent lucky. And if I had not done those things, the luck would have not played out the same way. I'm very careful to say that, you know, if you go make content, then you're going to have the same outcome as I did because that's not that's not true and I don't think that's the right message for people to hear. Anyway, the second best investment that I've ever made is in equity of my company of PWL Capital. Um, I got options early on that I that I pushed for and then I bought equity later on and uh we were actually acquired last year. Um, >> congratulations. >> Thanks. So, that was cool. And then I also got equity in our acquirer, which is an American company called One Digital. Um, so I still have a big chunk of my net worth. I know I say don't buy individual stocks. They're a private company. I think it's different, but I do still have a big chunk of my net worth in uh, One Digital Equity. >> So what percentage of your net worth then do you have in a private company? >> It's a lot, man. Um, >> 99%. >> It's not that much, but it's uh, it's a little under 50%. >> I know. >> Wow. I know it's a lot, but I'm you know what? I I put so much of myself into the work that I do. I I would not want to do that if I didn't have meaningful equity stake in the company that I'm helping to build. >> Yeah. >> How does that feel? Does that make you nervous at all? Do you think that you could improve your peace of mind if you just didn't have that? >> One Digital is a big company. Um they're they're a diversified business. They're a large company. Like it's probably not going to zero. I it could reduce in in value, but but I'm not super worried about a total loss. Even if that happened though, I'd still be in a way better financial position than I ever thought that I would be, like when I was growing up or whatever. So, I'm from that perspective pretty comfortable. But again, it's it's the risk is there and I I'm I'm not blind to that at all. But the amount of myself that I put into the work that I do, I I just I wouldn't do it if I didn't have a meaningful portion of my net worth in in there. What's the worst investment you've ever made? >> Well, we were very careful with crypto. >> Um, but when Bitcoin hit 60K for the first time, we had an academic, like a distinguished academic in traditional finance, who had written a book on crypto and DeFi. We had him on our podcast and we spent an hour talking about his normal finance research, which is like, you know, he's one of the top in his field. And then we spent an hour talking about crypto and DeFi. And I was like, man, I I had kind of ignored cryp, not ignored, but I' I'd been very skeptical of crypto. But then when this this guy's like, man, he's super credible. He he knows normal finance. I was going to say real, but that might piss people off. Oh well, I said >> uh that he he knows that stuff better than than anybody, including me. So I was like, okay, if he's if he's taking this stuff seriously, I've got to take it seriously. And so this is the first time Bitcoin's at 50K 60K and I bought equal amounts of Bitcoin and Ethereum and uh then it went back to whatever it crashed to to 30 30K or something like that after that and I'm pretty sure I sold at the at the bottom. >> But you ignored your own advice of just buy and don't look at it. I bought it for the way that I justified it to myself at the time is after that podcast episode where where this guy who I respect was was talking about how much crypto is going to change the future of finance. I was like, "Okay, I need I need to I need to take this more seriously and treat it the same way that I treat my research in other areas." And so we actually did, I think it was 13 episodes of a sort of sub sub series of our podcast where we did an extra release every week for 13 weeks or whatever it was >> purely on on crypto. So, we had a bunch of experts with just different areas of expertise that touched crypto. And the way that I justified the purchase to myself was that if I'm going to get my head into this and research it, I feel like I need to own own some and and get experience with using a wallet and using an exchange and all that kind of stuff. So, that was my justification. But, yeah, I bought at the worst time and sold at the worst time. No, no regrets. >> Paper hands. You could have just held. >> I could have had the same amount today as I did then. >> Yeah, but you would have sold though at the peak. You could easily have bought at 60 and then sold at 122. >> I held down held down to 30 and then back up to 122. >> Yeah. No, no, no. When it drops to 30, you double down. You write it to 125. You sell. It's not difficult. >> I'll do I'll do that next. The next cycle I I'll do that. >> I'm curious. What is a widely acceptable piece of financial advice that sounds sensible but actually makes people poorer? I'm going to take a little bit of a different angle to the question. I I just talked about some of the biggest myths in personal finance in a in a recent video. And one of the things that I talked about is that you should save as much as possible as early as possible to live to live a good life. Uh so that now we're not talking about financial wealth because that certainly will benefit your financial wealth. Mhm. >> But I think that young people really squeezing themselves to save as much as they possibly can and making sacrifices early on in life, uh, I don't know if that's always the best thing to do for their long-term outcome when you consider the whole picture, not just the size of their portfolio or the amount of money in their bank account. >> I think you might have just triggered Graham. Yeah, I was about to say because that was my entire philosophy was save as much money as possible as early as possible because I did this compound interest calculator and when I was 18 years old, I'll never forget this. I put a dollar in the Money Chimp calculator and then I saw that by the age of 65 that would be worth like $40 or $50. And I thought, "Oh my gosh, every dollar I spend is actually worth 50 bucks." And so every single thing it was like a $10 shirt times 50, a coffee time 50, shoes times 50. And when I saw that, I thought there's no way I'm spending any money. And so I got my expenses as low as possible. I remember even I wouldn't go out to restaurants. I would eat at home and then go to like show up and drink the water and eat the bread because I could save the $20 times 50. Everything was times 50. And I look back at that and I think I probably could have spent more money, but I have zero regrets. >> That's I mean, and that's and that's fine. If you have zero regrets, that's good. And it's not just about eating eating out of restaurants. There's other things like investing in education. You've obviously had a great outcome professionally. Investing in education, investing in experiences. Like there are lots of other things that you can spend money on that are not saving or investing in stocks. So you're not wrong, and I don't disagree with you. Young people should save. I just think that there's often a perception that leads people to do things like go to restaurants and only drink water. That's not always healthy. >> So, what's the downside of saving too much money? >> Uh, well, giving up on life experiences, giving up on things that you might have enjoyed doing. You can look back and say, "I didn't regret that." And that's fine. But there are things that are nice to spend money on. They can save time, that can give you enjoyable experiences. And I think that that perception that spending anything is bad. I think that can be unhealthy to to to a point. We'll get more onto the psychology behind spending and saving and investing all the psychology of money later in the episode, but I am curious because you do manage around eight billion dollars worth of assets. So, financially then in terms of financial wealth, what would you say is a widely accepted belief that people think is responsible and it's generally accepted by financially literate people that's actually going to make you poor? I I think picking stocks and I know you guys dabble in that, but I also know it's a tiny part of your portfolio, so I don't think you'll disagree with me on that. >> I I think there's a there's a point in financial literacy where people believe that they can pick that they should be picking stocks and that's how you invest. And I think that's probably on average detrimental to most people. >> You know what's funny? It reminds me of that like bell curve graph where it's like the low IQ, the average [laughter] IQ, and the high IQ. And on both ends of the bell curve, it's like >> index funds. In the middle, it's picking stocks. It's like people that know nothing like I know nothing so I'm just going to buy index funds and the people that like know everything like the sense the masters are like I'm buying index funds. >> That is a perfect meme for the point. I agree. >> Do you think people can pick stocks successfully long term and a good example of this is Chris Camilo. I don't know what it is. He seems to have his finger on the pulse where his batting average is just insane even in this market. It's just how on earth did you know that? So, there's a reason that you guys talk about Chris Camilo a lot. Yes. Because he's very unique. There are not a lot of people that are doing that. Now, I'm sure he's brilliant. Has he been lucky? There's probably some luck involved. Is he skilled? I I have no doubt. Should other people try and replicate what he is doing? Probably not. >> So, if investing is at the end of the day really simple, just buying index funds, why do so many people screw it up? >> H Yeah, that's a that's a very good question. I think people want to believe that there's something more. I think that's part of it. I think a lot of people don't even know about index funds still. I think for a lot of people just learning about that is a huge leap forward in terms of their financial literacy. I think people learn that in the long run in many cases where they'll they'll be picking stocks. They'll have a portfolio with whatever five or 15 or 20 stocks and then at some point they evaluate how they would have done if they had just bought the index and realize that they did have positive returns with their relatively concentrated stock portfolio, but they would have actually done better with less of their own time invested if they just bought the index. And so then then they'll think, "Oh, you know what? I'm just going to buy the index." Um, so I think it's it's a learning process and sometimes people need to learn through experience, but sometimes people just aren't aware that index funds are an option. >> That was exactly me because I started off with index funds. I believe in 2013 with a Roth IRA, Vanguard index fund, super simple. In 2020, everything crashed and I started buying individual stocks and I diverted away from the index funds. I still had my index funds, but I plowed into individual stocks. And 2020, they did insane. I think in one year I was up like 30 something% on these individual stocks, but I realized I'm really bad at selling because I'm the type when I buy something, I never want to sell it. And so I held and they kept going up. And then in 2022, they went down. And when I looked at the price when they went down from all the ones I held, I had made more just in the index fund that did nothing. And so I sold all of them at the low. >> Uh, no, I staggered. So I tax loss harvested. Some of them actually did insanely well. I think it was like Tesla that did really well. Google did really well. There were a few companies that just exceeded my expectations and then others I lost like Robin Hood unfortunately. So overall, I still made money, but I just sold all of them and then index funds and I stuck with index funds ever since. >> And that's kind of what you'd sus what you would expect statistically. Most people are going to have that type of experience. A very small number of people are going to have the the Chris Camilo type experience where they just compound like crazy, but that's the exception. That's like finding someone that won the lottery twice and being like, look, let's find replicate what he did. I don't think it's realistic. How common is it that you see really really bad financial advice being spread online on Tik Tok or Instagram or YouTube by people of authority that people listen to? Like is this a very common thing or what are the biggest myths that people spread that are actually very harmful? >> I think it's extremely common. The idea that you can pick individual stocks, the idea that you can pick stocks based on their dividend yield covered calls is another one that comes up a lot. >> We'll talk about that. That's in the outline. Do not worry. We have that in the outline. You guys got to keep watching because that's in there and I would love to get your take on this because we've talked about a lot. >> Yeah, I know you guys have. >> Imagine on your 8 billion that you have invested, you make 1% a week. >> That's not how it works. >> So, I've been thinking about how to explain this to you. Should we go there now or >> No, no, no. We'll go save it. Yeah, we'll save it. We'll save it. >> Okay. Okay. I I think the product that gets sold a lot by influencers and by people who are trying to create content is hope. And that's sold many different ways. It's sold by saying, "Well, if you pick this Man, the scam comments on my YouTube channel about whatever insert name of the the new token, like the ICO scams, correct? >> Those are all based on hope. It's like if you invest in this thing, you're going to have a great financial outcome. >> And I think that gets sold a lot. You're going to build passive income with covered calls. You're going to build passive income with dividend stocks. You're going to pick the next big token before it blows up. And the product that that they're selling people is is hope, but it's it's not it's not real. It's it's usually uh designed for for clicks or or the people selling it just don't understand what they're talking about. I'm not talking about you with covered calls. Maybe a little bit. Um but yeah, so I think there's lots of advice like that out there that people listen to and it sounds sensible when you hear it. You hear, well, you can make 1% weekly with covered calls. That sounds really good. And people are like, well, yeah, I want that. I want to I want to be financially independent without having to save a huge portion of my income. Uh, so yeah, I stuff like that is is easy for people to consume because it gives them hope. >> Can you give bad advice if you recommend index funds? Every single day that you wait to bring AI into your business, you're falling 2 days behind. But the question is, how do you keep up? The competition is only moving faster. Fortunately, there's our sponsored Netswuite. Next, you probably know Netswuite, the AI powered business management suite that securely connects all of your data. It brings your financials, inventory, commerce, HR, and CRM into a single source of truth, and it's trusted by over 43,000 customers. On top of that, Netswuite Next is the next huge leap in how business gets done because AI is built into everything that you do. It automatically surfaces custom insights throughout your day. AI agents work alongside you to solve problems and handle the routine work. And literally, anytime you have a question about anything, ask. It's just like having a conversation with your colleague. Netswuite Next is customized for a wide range of industries, so it supports the way your business truly works. Whether your company earns millions or hundreds of millions, it's time for Netswuite next. For the first time ever, you can try Netswuite Next for free. If your revenues are at least in the seven figures, go to netswuite.ai/ic. Once again, that is netsweet. Or just click the link down below in the description. Built for every industry, ready for every boardroom. Netswuite.ai/icistic. Can you give bad advice if you recommend index funds? >> I think if you tell people to build a diversified portfolio of index funds and that that's for the money that they're not going to touch for a very long time, I think it's very difficult for that to end up being advice that you would later say is bad. >> Now, with the market though at all-time highs and valuations are pretty stretched, should people be more careful about where they put their money? >> Alltime highs are normal for first things to understand. Very, very normal. They happen all the time, which you should expect in a stock market that is increasing over time. Earnings are going up. Recently, valuations have gone up. All-time highs are are just part of the the stock market. They're always going to happen. They're not typically followed by crashes. They're actually typ more typically followed by more all-time highs rather than declines. So, that's all-time highs. Valuations are a little bit different. I think US market valuations are high. They're they're as close to as high as they've been throughout US market history. When you sort future US stock returns by their starting valuation, when valuations are as high as they are now, future returns are almost always low or negative >> in the US market. >> And I think people hear that statistic or they see those data and they they get scared. They they start wondering the type of questions that you just asked me. When you look outside of the US, which is something that I have done for 10 10 other developed markets, it's a much wider range of outcomes. So if you sort future returns by starting valuations across all 10 developed markets that that I looked at, uh you do still see a relationship where lower starting valuations have higher average returns. But when you include other countries, there's a much wider range of outcomes. So you can have valuations where they are now in the US market and in Canada for example, there are 10-year periods following starting valuations this high where returns are very positive. And the same is true in other countries. So I think it's a there's some information there's there's some signal in valuations but there's a lot of noise. So I I would not use it to time the market. I wouldn't be worried about it. What I would do and then I heard you guys talked about this in a recent podcast about uh >> about Vanguard's expected returns always being lower. >> So but but I think that's the reasonable interpretation. Valuations are high. We should expect lower returns going forward. But that does not mean the market's going to crash. It doesn't mean you should get out of stocks. I think if anything it's a very good argument to be diversified outside of the US market. Not completely. I think global market capitalization weights are a very good starting point for any portfolio. >> I think that's going to go over a lot of the viewers heads. That's very academic and I know obviously you have a background in academia. But I I do question [clears throat] should you base your actual behavior and your investing decisions on your knowledge? Because people now hear this and they think oh I need to acquire this knowledge in order to know what to do. But even even still, like you would probably say that you should just dollar cost average into index funds. And so how much does this knowledge actually even help you? How you talk about valuations, you talk about all-time highs. Oh well, at all-time highs, it typically actually continues climbing at valuations as high as they are, then this will happen. When in actuality, all of this knowledge does it act like it doesn't sound like it translates into behavioral changes or decisions. >> I think that's the benefit of the knowledge. I think when when you acquire knowledge and when you understand things about what is the relationship between stock market valuations and future returns it's very comforting to know that when you do that research it typically suggests to do nothing and I sometimes people need to go down that path of hear of learning that of seeing the data uh hearing me or anybody else talk about it for them to feel comfortable investing when they see people saying well markets are at all-time highs that's a bad thing it's not but you have to be comfortable with the data to be comfortable with the fact that it's not a bad thing. Maybe some people can just say that they have so much belief in financial markets and in index investing and in stocks that they're going to completely ignore the news and they're going to completely ignore people talking about valuations, but I think a lot of people do need that reassurance. So, I try and do that in a lot of my videos where it's like a lot of people are saying that this is a problem that you should be worried about that. Here's why you probably shouldn't. It seems like the problem, if you distill it down, is people taking too much action, trying to do too much research, trying to buy too many individual stocks, trying to predict things, when in actuality, what they should be doing is simplifying. What do you think about a one fund portfolio? Do you think that that is a viable method for people to do? It is the most simplest, hands-off approach to investing. >> Yeah, as you guys mentioned, my firm manages around $8 billion. A huge portion of those assets, believe it or not, are in single fund portfolios. The rebalancing is done inside of the fund. Uh in Canada at least, it's very tax efficient. Uh it's very operationally efficient. Uh behaviorally, it's fantastic because you don't see all the individual components. Oh, you know, international stocks went down and you and you start to worry about that. So, I'm a big fan. My my personal portfolio is 100% in a single fund portfolio. >> Your personal portfolio is in 100% one. >> Yeah, it's a Canadian listed mutual fund, so that the ticker doesn't really matter to most of your audience. Um but yeah, it's all in a single fund. How often do you check your portfolio? >> Almost never. I couldn't even tell you what it's worth right now. >> And do you have then someone that's managing your portfolio? >> Yeah. Yeah. So I I have an adviser through my firm. >> Now it's in one fund. So most of their advising is on, you know, how much should I be contributing to my registered accounts this year or right now or whatever or should I do this for tax purposes or whatever. And so in practice then what you do is you get paid out from YouTube from your job and then your adviser will just take that money and throw it in this account and you don't even check it. >> Yeah. >> What's the strongest argument against a one fund portfolio? >> You you could make some tax arguments that maybe there are fewer tax loss harvesting opportunities with a with a single fund. I don't love that argument. ETFs are so tax efficient like you mentioned VT. The funds that I'm talking about in Canada are extremely tax efficient. So the idea that maybe you're missing some tax loss harvesting opportunities, I think you're probably making up for that by how tax efficient the single fund is in the first place. People love complexity, as you said, people have a bias for wanting to do stuff, having components in their portfolio, maybe that makes some people feel more engaged, >> but I don't know, man. Not having to rebalance, not having to worry about anything. It's it's really nice. >> What would you consider to be the perfect portfolio? >> No. Does that include real estate, cash, treasuries, gold? >> There is no universally perfect portfolio. So let let's start there. There's a really interesting book actually where a whole bunch of Nobel laureates were interviewed by uh by another professor at MIT about what their definition of the perfect portfolio is. I think this would make a great video. I just haven't made it yet. And everybody has a different definition. And I think that's really telling just about uh investing and and portfolio management in general that you can take all these brilliant people who have literally shaped the field of finance and they don't agree on what the perfect portfolio looks like. And so how should you know what does my opinion matter on what the perfect portfolio? So I I don't have a universal answer. My portfolio is uh global equities with a Canadian home country bias. So that's relevant for Canadians. For Americans it's a little bit different. You could still argue for a bit of a home country bias, but US is such a big part of the market anyway. Anyway, so Canadian home country bias. The rest global market capitalization weighted. It's my portfolio is very similar to an index fund, but it does tilt a little bit more towards small cap and value stocks, which is like >> I don't know. It's a small optimization that I that I like, but for all intents and purposes, it's very similar to an index fund. I own a house. I don't own gold. I don't own any other real estate assets. I have I have some cash. Probably more cash than I would tell most people to have, but it it's kind of nice having cash. >> What percent do you have in cash? >> In percentage terms, it's not a huge amount. In dollar terms, it feels kind of big, but it's >> Is it like 5% cash? >> Below below 5%. >> Oh, that's not like 2% 1%. >> Uh, it's probably close to four. You know what? probably if I can include everything it's below below 3%. >> Why is that? [laughter] >> It feels like a big dollar amount. I don't know. I look at it I'm like I should >> So we got money McGee over here. Okay. Mr. Deep. >> I mean 3% has got millions of dollars Jeff. >> I mean he is managing a$8 billion. >> It's not that's not my $8 billion. [laughter] >> Are you not a billionaire yet? Okay. Got it. >> To me that sounds really reasonable. >> Yeah. Like why do you feel like >> it's basically like global index fund portfolio house some cash? Why do I feel like the cash is too much? I don't know, man. Because I I know that cash has a low expected return. I know that in real terms, it's probably losing money over the long term, and I don't have any concrete reason to have it right now. Um, but it's like, I don't know, we have to do something in the house. It's just nice to have >> cash there. Um, >> so speaking of savings, do you think the S&P 500 is a reasonable savings account? >> It depends how big your spending liabilities are relative to your portfolio. If you might need $1,000 next year or sometime in the next six months and you have $10 million invested in stocks, I'm not worried about it. But if you need a million dollars next year and you have $2 million invested in the market, I' I'd maybe think about taking some of that out of the market. So, it really depends on the proportion that you need liquidity on. >> So, how much should people be saving? >> It's another tough one. It really depends on each individual situation and the person's goals and all that kind of stuff, but I there's been some research on this. somewhere between 10% at the low end and maybe a little bit higher than that if you want to be more aggressive is reasonable if you start saving at a at a normal point in your life. Uh it can be higher than that if you want to have a really aggressive retirement goal. But I I I don't like any like everyone's got to save 10%, everyone's got to save 20% of their income. I don't like that. I think everybody needs to sit down, look at what their specific goals are and map up how much map out how much they should be saving. It sounds like you put a strong emphasis on making goals, coming up with a plan, knowing what you want, and then making sure all of your decisions, beliefs, behaviors all serve that one goal. Where do people go wrong when they set goals? Cuz if everything hinges on your ability to set good goals for yourself, how does someone know if they're setting good goals? And what would be a failure of setting goals? Failure setting goals would be looking back and realizing that you set the wrong goals after you've spent 20 years trying to achieve whatever the thing you set out to achieve was. There is pretty interesting research suggesting that people are quite bad at identifying the goals that are actually important to them. Uh but there's also some pretty interesting research showing how you can overcome that to an extent. A big one is using what's called categorical prompts. So it's really just giving people the categories that important goals might fall into and that helps them ideulate goals that are actually meaningful to them. So that's a big one. And then another one and we did we have this research up on our website is presenting people with a master list of goals which is a pretty cool idea. It's basically take a whole bunch of goals that other people have generated and put them all into one big list. That's like it's not actually all goals you could possibly have but it's an approximation of all goals you could possibly have. And then people can go through that list and pick off goals that might be important to them. So those two exercises produce goals that people will later reflect on as being more meaningful to them. >> Let's say we're providing the average viewer for direction for advice on setting correct goals. What would if you were to distill it down to like one decision or thing that they should do actionable thing what would you what would you say that is? >> Yeah. So the the process that we use and we have an app on our website that people can use if they want to do this. We ask people to write down their goals. We then ask them to double the list of goals. Just gets you to think a little bit harder. Then we present them with the categories. So we for categories, we use the items in the perma model, which is a model of of well-being that comes from positive psychology. But it basically suggests that the the ingredients to a good life are positive emotion, which is feeling good right now. Like we're having a good time talking. That's positive emotion. I'm enjoying a coffee later, whatever. That's a posit positive emotion. >> Uh engagement. So being engaged in tasks uh that are that meet your skill level. I I would say like this now recording a podcast is is engaging. Relationships is having meaningful relationships. Meaning is doing things that are larger than yourself. And accomplishment which is accomplishing hard things like getting to a million subscribers on a YouTube channel for for example. >> So you give people those prompts. These are the categories that important goals might fall into. And then they fill out a few more goals. And then the final step is they they review the master list of goals that other people have prevented. And you get in the end you get a list of goals that have gone through this iterative process. And people tend to find the exercise really helpful. >> What are the best goals that people should be writing down that you've noticed lead to the highest amount of happiness? Now, I got to say, I don't care how much money you have because everyone loves finding a deal. There's just something about paying less than you should that just never gets old. And that's exactly why I love today's sponsor, What Not. For me, it's the same feeling. live on your phone and we are giving away $500 in whatnot credit later, so you better stick around. Whatnot is the number one live stream shopping app. You can score Pokémon cards, sports cards, toys, Legos, Funko Pops, electronics, tools, coins, even snacks, candy, meat, and seafood. With this, you're able to hop into a live show, spot something that you want, and it's yours in one tap. Like for me, I love buying Pokémon cards. I think it's so much fun. It's very nostalgic. I love seeing what you're able to get. Here's an example. By the way, I'm going to try to get a good deal. I won $4. There we go. Oh my gosh, I have so much fun doing this. I won that one. Only a dollar. Oh my gosh, someone's sleeping on it. I won it again. Only a dollar. Oh my gosh. Ice coffee hour won the auction. There we go. You don't have to catch a show live either. Flash sales and buy it now let you grab something instantly and it ships straight to your door. You can also talk to the sellers and other collectors in the chat when the show is running. And most of these shops are small businesses that you're supporting directly. Plus, with over 100 categories, WhatNot really does have something for everybody. Use your link or scan the QR code to get $15 off your first purchase anywhere on the app. That's whatnot.com/invite/ iced coffee hour or just scan the QR code on the screen. And if you follow us on whatnot, you're automatically entered to win $500 in whatnot credit. Winner is picked one month from today. Once again, that is whatnot.com/invite/iced coffee hour or you can just click the link down below in the description. I absolutely love running the podcast like filming with guests, YouTube strategy, traveling. It's all so fun. But there is one thing that I genuinely despise and that is back-end paperwork. No joke. If I have to do anything with payroll, taxes, or benefits, it be the And that's exactly why we've partnered with today's sponsor, Gusto. For those unaware, Gusto is an online payments and benefits software built for small businesses. It's all-in-one, remote friendly, and incredibly easy to use. So, you could pay, hire, on board, and support your team from anywhere. Gusto handles payroll, tax filing, direct deposits, health benefits, 401k, workers comp, all of it. And if you ever hit a tough HR situation, you get direct access to certified HR experts. Switching is super easy, too. All you have to do is transfer over your existing data, and you are up and running fast. You won't pay a scent until you run your first payroll. After that, it's one flat price with unlimited payroll runs. Last month, we hired a full-time editor, and I kid you not, we used Gusto to set up everything. He's actually over there. You better be working. It was super easy. I didn't crash out, and there was honestly a lot of peace of mind knowing everything was done correctly. Gusto's ranked number one on G2's highest satisfaction products list for 2026. Over 500,000 small businesses use them. So try Gusto today at gustto.comiced and get three months for free when you run your first payroll. That is three months of free payroll at gusto.com. Once again, that is guest o.com/iced with the link down below in the description. What are the best goals that people should be writing down that you've noticed lead to the highest amount of happiness? >> Yeah, it's a it's an interesting question. The most common goal when we did our goals survey, which is what we used to generate our our master list, was financial independence. It wasn't early financial independence. It was just financial independence at some point. So that is definitely a goal and I mean it's a goal that everybody should have because at some point we're as humans who age not going to be able to earn income. So I think that is a very good goal. I think you have to be careful with how aggressively you pursue it. We can talk more about that if you guys want. And then there are lots of other interesting ones about relationships and time with family. Uh time comes up a lot just freedom of time which is related to financial independence but not necessarily the same thing. Uh but if you just think through the perma model positive motion engage uh engagement relationships meaning and accomplishment there are tons of good goals that stem from that that will contribute to people living lives that that they enjoy more. Now, in terms of maximizing returns, going back to investing, what are your thoughts on margin for people who are young? Because I have a note here that your argument is that young people should potentially borrow to invest. And I would love for you to explain the rationale behind this. >> The economic models on lifetime saving and asset allocation suggest is that you want to reach your lifetime exposure to stocks as early as possible. Now, if you have $10,000 in your investment account, but you have $3 million of future earnings that you will eventually save, but don't don't yet have access to and your lifetime allocation to stock should be whatever uh 70% or something, >> then the amount you should have in stocks today based on economic models is much higher than your available savings. >> And therefore, you should borrow to invest to get closer to your optimal lifetime exposure to stocks. Now, should people use margin? The the downside of margin is that you can lose everything. You can you can have a total blowup. I think that's very unpleasant and can deter people from investing afterwards. Uh so I I don't tell people to use margin. I think conceptually leverage for young people does make sense. There are lots of other ways that people can get get leverage. People use leverage to an extent when they when they take out a mortgage to buy a house. Uh some people use leveraged ETFs. I don't have a super strong opinion on those. Yeah. So, it's a good idea in theory, but should people actually go out and borrow on margin to invest when they're 22 years old? I'd be pretty hesitant to. >> It was interesting. Chris Camille was making the argument that people who are young should be buying a 2 to 3x leveraged S&P 500 index and said that even at 2x leverage, if you're just going to be dollar cost averaging, you might see an 80% decline if the market collapses like 2008. But if you keep buying in long-term, it should outperform. >> Yeah. >> What are your thoughts on something like that, which is really aggressive, but as long as you could stay the path, assuming you're not going to panic sell or go to zero. >> Honestly, I don't hate it. I I'm a little hesitant to say yes, S&P 500 only because that's not really a diversified portfolio. The US market has gone through very long periods where it delivered no returns. Mhm. >> The the the general idea of using leverage for young people and using leveraged ETFs to get it is not terrible. I' I'd be very careful about who should actually go and implement that. Uh I think it behaviorally could be very very difficult for a lot of people, but I don't hate it. I don't I don't hate his comment. >> So, who should I'm curious because I think about it logically and it does sort of make sense. Obviously, there's going to be a little bit of decay because you are paying that margin fee or you're paying the expense ratio on a leveraged ETF that's usually going to be a little bit higher than the base form of the ETF. >> But you know what? So, we we had a professor on from uh from from Arizona who who's done a study on his was looking at single stock leverage products. >> He's actually less concerned about this stuff. Uh we we had another Yale professor too that talked about the same thing. I brought up the leverage decay. uh it's the volatility decay that people worry about. And both those guys said that's not really the right way to think about it. Like that's just part of the cost of leverage. But you look at going go and take out a margin loan or go and take out a whatever a bank loan and leverage ETFs overall with the total cost of implementing leverage through that that medium is going to be pretty competitive. I don't worry about that stuff. I think the behavioral issues are are much larger. So, if you are to do leveraged ETFs, then what would make the most sense is something similar to what you practice, which is you kind of just buy it and then let it sit and you don't even check your portfolio probably. >> Oh, yeah. I wouldn't be trying to go in and out of the market using leverage ETFs to to trade. >> But it is if you're holding 10, 15, 20 years there, you don't really see a problem in buying, you know, VT leveraged. >> So, again, I would be like recommending recommending leverage uh in my profession is like super super dangerous. Uh, so I'm not saying everybody should use leverage. Uh, I I don't want listeners to think that that's what I'm what I'm saying. I think for people who can psychologically handle it, who really understand the implications of what they're doing, the ups and downs that can come, the costs of doing it, all that kind of stuff. >> Here's where I'm getting at this. You are talking about this from a very academic standpoint of research and history. And then I think there's also a behavior component to this that >> for sure >> probably I'd say behavior is more important than what's academically correct. Would you agree with this? >> Yeah. In the paper that I mentioned uh that argues for this approach they they do kind of acknowledge that the behavior is a big issue. Uh the argument that they make in the paper is that if people understood the long-term benefits they would the the behavior the behavioral aspects would be a lot more palatable. like people don't realize how big the potential benefits are and that's why it's so behaviorally difficult. So they do talk about that but I you know talking to actual investors uh as as I do I would be really worried about most people successfully in implementing this type of strategy over a long period of time. >> How important is behavior when it comes to investing like this? >> Not just like this. I would say investing period behavior is is kind of everything. Investing is is simple but not easy. I didn't come up with that. Lots of people said that before, but it's, you know, you buy index funds. Very simple. But how many people actually do that and hold on them for the for the long run? Not a ton. >> So, should people be more afraid about losing money in the markets or more afraid about losing purchasing power of cash? >> Without question, cash without question. Over a 30-year horizon, cash is much riskier than the stock market. And from your perspective, if someone wants to save more money to invest, is it better for them to cut back or try to make more money? >> Make more money is is my opinion. People get pretty upset when I say that. Like when I when I make the point that I made earlier that maybe not everybody should be trying to save as much as they possibly can as early as possible. People get really upset when I say that. When I say people should maybe just earn more money, uh they get really upset about that, too. But I I think there are lots of ways people can earn more money. I I don't think you guys would disagree. Like you guys are both doing stuff. You're using your time in ways that allow you to earn more money than you could at I don't know working at a I'm not going to call anything out, but a job that makes less money. >> Like there's there are things that you can do there. Not not everything is in your control. And I and I completely acknowledge that. But there are things that can people can do to improve their situation. But that being said, it still does make sense for a lot of people to probably save more than they're spending because I do think that the US and probably just North America in general has a spending issue. >> I agree. >> And so if someone is dissatisfied with where they're at financially, >> for 99% of the people within that co within that population, it's probably they're spending too much. What sort of spending strategies or expenses do you think people waste their money on or strategies they should implement in order to improve their financial performance? I'm not a fan of budgeting personally. Never never clicked with me. But I think that what you can do is define the amount that you need to save in order to reach whatever your goal is and work backwards from there. And sometimes you might realize that the amount of saving you have to do to achieve the goal is way too aggressive. You want to retire at 35, so you have to save 60% of your income, which means you're living on whatever $1,200 a month or something. That probably doesn't sound palatable to a lot of people. So you adjust your goals. But I much prefer, and now this is what I do personally. I know how much I need to save each year. I save that and I don't really worry too much about the rest of the spending. Um, but I I'm also, you know, I'm not going to restaurants and just ordering water. >> But I think I'm naturally pretty >> pretty frugal. So, I think if someone has a spending problem, that probably requires deeper deeper reflection. >> I'm curious for you, Graham, because like you said, back in the day, you would do a lot of these like frugal life hacks and stuff like that. Realistically, those actual decisions did not probably amount to a very large change in your overall net worth. Now, if we fully remove that from the behavioral stacking that you probably did, like the habits that you formed, the habits are valuable, but >> the decisions themselves were probably not very productive to your current >> financial portfolio. >> Maybe. Maybe they were. And the reason I say that is because back then I was dumping everything into real estate. And I would basically be at zero dollars in my bank account at the end of the year because my goal was to have 100% invested. And so by December 31st, I'd be spending money on renovations. It would go to a down payment. I would be zero. And then I'd have commissions coming in like January to bit basically bump me back up. And so I invested everything. So I don't know. I think in the big picture, no. But if that prevented me from buying one property back in 2012, let's just say, then that would be pretty significant today. >> I think you're in a unique situation because if you weren't that guy, it would have changed your content and the appeal of your content. >> But also, I want to push back because I got the same experience. Like, we're talking about going to a restaurant and ordering water. >> My experience at the restaurant was not the food that I got and ate. My experience was going to the restaurant with friends. I got the same experience as everyone else minus a $30 entree cuz I ate at home. >> Same with going to the bar. Like I would go to the bar with friends. Would never get a drink. But we can go to a liquor store down the street >> and all one bottle. Yeah. One bottle. Pour it in a in a thing like this. >> Drink it outside of the bar. Have fun. And then we walk in the bar. Now you already got your drinks but for a fraction of the price. And then we just get waters. No one knows. You get like, you know, just a water and a glass. And oh, you know what? I used it. >> Bad day to be a restaurant owner. You know what's crazy? Bad day. >> This unlocked memory. This unlocked a memory. By the way, I'd ask for water with ice in it and they say, "Oh, by the way, could I get a lime?" >> Throw the lime in there. No one has any idea. It's just water. I just remembered that. I don't know how small businesses would survive [laughter] if people if everyone did that. I am curious if you could go back and give yourself now. Let's just say you gave yourself $10,000 from what you own right now and you had to spend it and you couldn't invest it to your 18-year-old self and so you had $10,000 to spend over the next, you know, 10 years, an extra thousand a year just on dinners or whatever it is, would you do that? Yes, you would do that. >> Yeah. Yeah. Even though you could not invest the 10,000 you had. >> Yeah. $10,000 today. If I could give it to myself back then, I >> probably not $10,000 today, though. It's $10,000 if you're giving it back to [clears throat] him. Back then, it would be like, you know, losing 10 grand today, but $2,000 back. >> Let's just say, let's just say that $10,000 back then it's just now through real estate and this and that worth 60,000. Would I take $60,000 today to get Probably not. But if it's 10K, I would. >> What's the number? >> I mean, I have no idea. I would have I would have no clue how to how to compound what went to which property and then to what index fund. >> Wait, what number would you do it? >> Not 60, but you would do it at 10. >> Uh, maybe like 30. 30 to 10. >> 30 to 10. Yeah. >> And giggles, but at the same time I got 3x over I mean it's 18 to 35. So 17 years. So 3x over 17 years. >> Yeah, that sounds about on track with the S&P. >> It's it's it's probably >> enough. Close enough. Like I said, I didn't miss out on experiences at all. I got the same experience. I just found a way to do it cheaper. >> I think a lot of people could put into practice the things that you did when you were younger for sure because I 100% admit for most people it is a a spending issue. >> Yeah, I I agree with that. I think sp spending is a huge problem. Uh a lot of people don't know what they spend. They don't they don't realize the impulses that they have to spend and then all of a sudden they have no no money. And the the problem with the problem with this whole issue is that because of compounding 20 30 years down the road when you realize you had a spending problem, there's not a whole lot you can do about it. You can't undo the saving that you didn't do because you can't catch up with the compounding that you missed. So those that do end up saving money, you argue of course ETFs all the way, but I am curious within ETFs. I know that it is the objective of these ETFs to get as much money into the ETF as possible so then they can collect their expense ratio fee. It's easier to sell a product, the product being the ETF, if it's not as volatile if it appeals to the investor's emotion because it's easier to digest as an investor less volatility. But because of that, do you think that they could be compromising returns over time, riskadjusted returns, because they're trying to sell something a little bit more conservative? >> I don't know about the conservative angle, but I think that this this issue of ETFs being created to be marketable is a massive issue. I I did a video earlier this year that I called the rise of ETF slop where I basically said that we're in this age now where there are hundreds of ETFs, maybe maybe even more now, being created every year for all kinds of wacky investment strategies that appeal to the biases that investors have. >> So, I talk in that video, I think it was about uh covered call ETFs. Uh I talked about thematic ETFs, >> like you got your semiconductors, you got your whatever AI ETFs, all that kind of stuff. Uh there were a couple of other ones too, a single stock ETFs. You can buy a covered call leveraged single stock ETF, which is like it's wild, but they're attracting a ton of assets. And the crazy thing about them is they they have they have high fees. And so an issuer can come out and create whatever 15 new ETFs that cover individual stocks. If one of them attracts a bunch of assets because it does well over the short term or because that stock gets a bunch of media coverage or whatever, it makes it worthwhile for them to have issued all of those all of those ETFs. And so we're in an environment now where there are all of these financial products that are behaviorally very appealing because whatever they pay a 10% yield or a buffer ETFs that was the other one that I had in that video. So they're capped on the upside and the downside. And again like to your to your point that's very behaviorally attractive if you listen to the story. Oh, I don't have to lose money and I can invest in stocks. That sounds amazing. People don't realize how much upside they're giving up in the long run. And all those products tend to have higher fees. And so you get in this situation where the ETF issuers want to be profitable as they should be and so they create products that are appealing to people that are very marketable that have higher fees and those are the ones that get advertised to investors and people buy them. >> What do you think about covered call ETFs? >> I mean I've done I did I think three videos on this topic last year and I I I don't know who should actually invest them. I think a lot of people do because they pay high income yields and that feels really good. But who should actually invest in that strategy? I I'm at a loss. Like I really don't I agree. >> I would Well, I would argue that the people who should invest in that are the people who mentally want to see that income coming in and they they like to see that I think it's like 8% a year. That's a consistent dividend without a ton of volatility and just psychologically just makes them feel better to know, hey, if the market goes up or down, I'm making my 8%. >> But you you're not right because you're making if if the portfolio crashes 30%, you don't get 8% on your initial investment. Like that's there's volatility in that too. Uh but I think that people don't understand the thing people don't understand with covered call funds, covered calls in general just as a strategy is that it introduces asymmetry into the distribution of outcomes. It's basically like it reduces volatility. So if you look at a covered call ETF or or whatever you look at it sharp ratio, it's that looks that looks really good. It's a good sharp ratio. It's got less volatility than the market, but all of that most of that volatility reduction is coming on the upside. You're keeping most of the downside. You get a little bit of premium buffer, but you're keeping most of the downside risk and you're completely capped in your upside. >> What does that mean for Jack's option strategy? >> Okay. So, I want to just think through like you talk about getting whatever 3% a week or 1% a week, whatever that is. >> Well, a lot of that every I I hope every time I've said that it's more of like tongue and cheek. It's kind of like, yeah, you know, I get 3% a week. Obviously, you do not average 3% a week. That makes zero sense as an investor. you can't do that. Uh that being said, >> I'm glad to hear you say that. >> Yeah, that being said, but uh I I do think that it's not a bad strategy to play around with with a little bit of money on the side and I've been doing it and so far it's it's tended to work pretty well. >> Have you benchmarked your covered call returns relative to the underlying stock? >> Well, as of late, yes. And relative to the underlying stock, I have underperformed, >> which is kind of what you'd expect. I mean, listen, I've heard you guys talk about this stuff. I know it's a small part of your portfolio, and I know you enjoy doing it, and it's like that's that's fine, but as a strategy, what people have to understand about covered calls is that the expectation is that you're going to underperform the underlying >> structurally, like that is what is going to happen. And if you want that, and if you understand that you're giving up upside volatility, but not downside volatility, which basically means if it goes down, you still capture most of that, but if it bounces back, you don't capture that. That's just that's mechanically the way a covered call works. If people get that and they have fun doing it, like who am I to say they shouldn't do it? I just think people have to understand what the expectation is when they go into that type of strategy. >> What do you think about the opposite strategy of buying call options or buying put options then? >> Well, two very different strategies. Obviously, buying call options is a way to get leverage. So, I I don't think people should all I'm not going to say everybody should be buying calls, but we talked earlier about there there can be some benefits to leverage in a long-term portfolio. When we had Robert Merin on our podcast, who's a Nobel laureate, and he's done a ton of the the original research on life cycle asset allocation, how should people invest over their lifetimes? He's an advocate for using a bit of leverage as well. uh and he talked about on our podcast that he would actually rather people use call options than margin >> because you can't completely blow yourself up with a call option whereas with margin you can. Um but the other comment that he made that was really interesting is that he he would not advocate for people buying call options themselves. He would like to see it embedded in a financial product. So you buy an ETF that gives you exposure to the S&P 500 plus plus calls to give you some leverage. >> Uh and then you just buy the ETF and it's very simple. But Merin's point was people shouldn't be trying to buy calls themselves because people are errorprone and there's a lot of risk that you screw something up. >> So given all these strategies, who should buy individual stocks and when is that the right move to make? >> I think you guys are great examples where I I think you have a lot of fun doing it. Uh it gives you something to talk about. It's entertaining to listen to you talk about it. But those are all reasons that people do buy individual stocks. It's pretty boring to show up to a a dinner party. uh especially if you're not ordering food and and say that you know you just buy index funds but you guys you guys have great stories to tell uh so you can not order food and talk about I can't remember the name of the stock that you guys were talking about recently but the you have stocks to talk about you have stories to tell and that's >> that's true because my Robin Hood loss ended up becoming one of our most viewed clips it's been reposted so many times I think cumulatively we probably got 50 million views in that Robin just me losing money on Robin Hood so I made some some of the money I'd lost so much more than that clip generated, but it helps helps offset some of the losses on that. >> There are other niche scenarios, too, like some people who are directors of companies are required to hold stock. Um, some people who are insiders at companies that have gone public and hold a huge amount of stock with a low cost basis. In many cases, they want to continue holding the stock not just for tax reasons, but because there's a huge sentimental value. And it's like if that person has diversified enough for them to be set for the rest of their life and they want to continue holding the stock of the company they help to start, I'm not going to tell them that's that's a bad thing to do. So there there are reasons like that. But who should like commit to picking individual stock as part of their long-term investment strategy for reasons like for objectively uh objective reasons like it's going to improve their long-term outcome? I honestly don't think anybody. >> Is it possible though that we can continue to see these 10 to 15% returns every single year? Because my concern is that we've all gotten very spoiled that for the last 15 plus years we're seeing 12% annualized returns. What do you think are the returns that we're probably going to see over the next 10 years? >> We as a firm produce capital market expectations similar to what Vanguard does. I guess I think ours are a bit higher though. Uh but I think we're just below 7% a year as our long-term expected return for that's a globally diversified portfolio with a Canadian home country bias. >> Whatever. It's probably roughly similar for just a global market portfolio. Maybe a little bit lower because the US is a bigger weight, but whatever. Call it between 6 and 7% I think is a reasonable long-term expectation. That's a nominal return. So before before inflation. I don't think the returns we've seen in the US market in recent history are are normal. I did a video on that. Uh, I felt like it was a bit of a throwaway video maybe a couple years ago where I just talked about like what have the actual returns been of global stock markets throughout history of the US market throughout periods other than this one that we're in right now. >> And it's it's pretty clear that this current period is an anomaly. It's not a period that we should expect to repeat forever. And I think there is a there's a danger there where people look at 10% as such a common number. I think that was the title of my video. Do do stocks return 10% a year? And the thumbnail says no, they do not. But uh I think that 10% number is dangerous because it it leads people to think uh through long-term financial decisions on the assumption of 10% returns and that can lead to it can lead to mistakes. >> How much international equity should people own? >> The easiest starting point I love there's there's a quote from Eugene FMA who's a Nobel Prize winning economist. He's the guy that kind of created the idea of market efficiency which is the idea that that market prices contain all available information. Uh in an efficient market you shouldn't try and pig stock. So like this whole concept of index investing really sits on top of FMA's research his comment about about answering your question is uh you've got to talk yourself out of the market portfolio. So you look at market capitalization weights the market has priced in the optimal asset alloc allocation approximately. Yeah. >> So look at that as a starting point and you've got to talk yourself out of it. Now you can talk yourself out of it to an extent. If you're an American maybe you do have a bit of a home country bias. if you're Canadian as I am and and as we reflect on our portfolios again, maybe you have a bit of a home country bias, but market capitalization weight should be the starting point. So that's whatever 60 to 65% US and the rest international. >> How do you know when you're being too conservative with your investments? Every business owner hits a point where they need a real specialist, a developer, a designer, or someone who actually knows AI, but a full-time hire with a salary and benefits is a huge commitment for a 3-month project. That's exactly why we've partnered with Upwork. Upwork is where businesses find highly skilled freelance professionals for specialized work from software development and AI implementation to marketing, design, and business operations. You can browse profiles, review past work, and get help scoping the role so you know exactly what you're getting before you commit to anyone. With Business Plus, you can access the top 1% of talent on Upwork. AI powered shortlisting delivers a curated short list of top freelancers matched to your goals in under 6 hours. No endless searching required. Plus, contracts and payments all live in one place, so you're not chasing invoices while trying to run the company. After running my own business for 7 years, I've learned that the success of a business relies entirely on the people involved. So, if you're not looking at Upwork, what are you doing? I've personally used Upwork, and it genuinely makes the entire process easier and more affordable with industry low fees. Posting a job takes minutes, and signing up is free. Over 170,000 freelancers on the platform hold five-star ratings, so you're hiring someone with a verified track record. Visit upwork.com/coff right now and post your job for free. That is upwork.com/coff or just click the link down below in the description to connect with top talent ready to help your business grow. How do you know when you're being too conservative with your investments? >> I don't know if you can know that. We we we have a a tool on our website that in in my opinion is the best. Uh it's called a psychometric risk uh tolerance assessment tool. So it's basically like a it's a bunch of survey questions that you go through and it spits out a range of asset allocations that make sense for you. >> I think doing something like that so you have an idea of what you're comfortable with makes a lot of sense and if you're more conservative than that then that that'll help to to tell you. I think a lot of people probably are more conservative than they should be. I think tools like target date funds there there is research on this out of Boston College I believe showing that target date funds do help people increase their equity exposure when they're younger relative to what they would do if they were on their own. I think financial adviserss can have the same effect but people people have the reason in that research is that people tend to have p pessimistic expectations more pessimistic than they probably should be which leads them to have more conservative portfolios. So, it's it's it's a tough question to answer, but it's definitely something worth interrogating for each person. >> When does it make sense to have a financial adviser? If what your firm mostly invests in is just a single ETF, one fund portfolio, then why would it make sense for your clients to be putting their money with you paying fees when they could basically be doing the same thing? >> We're huge advocates of DIY investing. I mean, my my YouTube channel and our content in general is like, at least in Canada, one of the top resources for do-it-yourself investors to figure out how to do it themselves. So, I'm a big advocate for doing that for people who can. There are a couple reasons I think that that people do hand it off. One is implementation. So, we can say you just buy a fund, but you still have to figure out which accounts you're buying it in. You still have to figure out when you should sell it, um, if you should, how to fund your spending, where to put new savings, which fund it should be, what what asset allocation it should be. There's lots of decisions leading up to that final step of just buying a fund. Just buying the fund is the easy part and there's a lot of complexity. So people could spend hours and hours doing research and listening to podcasts like this to arrive at those decisions or if they want to hand it off, they can contact a financial adviser and be told basically based on your situation, this is what we would recommend. So reducing complexity is uh is one and implementation. And the the other one is comfort. We have a ton of people who find us through our podcasts. They'll be like dedicated listeners for years and then they'll become clients at some point and they'll tell us that they stopped listening to the podcast because they didn't have to worry about this stuff anymore and it's a huge weight off their shoulders. It's a really interesting phenomenon but I think it speaks to one of the reasons that people outsource this stuff uh which is mental overhead. It just it just goes away. It's one less thing to think about. >> So you're at $8 billion in assets under management right now. >> Canadian dollars. Yeah. >> Canadian dollars. >> Oh, that's like 2 million America. >> It's not that low. >> Okay. [laughter] Did you notice a stark increase in the amount of clients that you had before and after you went on dire of a CEO? >> No, not a stark increase. Like there was definitely a period of of heightened interest where we we fielded a whole bunch of calls. Uh but it no, not a huge difference. >> Would you say would you be able to distill it down to a number like going on a podcast that gets 2 million views like Diary of a CEO? How much money in deposits did you get? >> Honestly, it would be a rounding error. like it's >> really >> it was not a huge deal. A lot of interest, a lot of phone calls, uh a lot of new subscribers to my channel and our podcast and stuff like that, but I mean, we're already a big enough firm that I don't think something like that is going to move the needle that much. >> I have a feeling for something like that, it's going to take repeated >> Yeah. exposure. They subscribe, they become a >> It's going to start with that and then they're going to go down the rabbit hole and then like 3 years later, >> then it'll be like sees some dude on a podcast gives him their life savings. Yo, I saw you in diary of CEO. Here's all my money. >> Yeah. >> Now, if you're fielding a lot of these calls, I'm curious, what's the worst call and financial situation that you've seen? >> I don't take the calls. So, it's tough for me to say, but I I think probably the most common situation where I look at it and it's like, yeah, like this this person really needed our help is people who are just sitting in cash. They've got a successful business or they've got a high income job or whatever and they've just been shoveling money into a savings account and it's literally sitting in cash because they don't know what to do. >> What's the most amount of cash you've seen? >> I don't millions of dollars. I don't know. >> Millions. So, it was a small business owner or something that just saved up everything, throw millions of dollars of cash >> or or someone who sold a business and they stuck in a savings account because they didn't know what to do and it's just it's sits there. So, that that's one of those it's a situation where you look at it, it's like, yeah, okay. So that the our fee uh relative to the opportunity cost of sitting in cash is negligible for that person. >> And what about the strangest story? >> Weird ones would probably be people who have started businesses in legal gray areas um and and come to us. We've had to be like uh we we can't touch this. Uh there been some interesting ones there. other ones with uh with crypto where people just made a huge on some random token and it's like it becomes real money and it's life-changing and it's just you look at it and it's like wow that's >> what's the biggest amount you've seen >> from that type of scenario >> tens of millions >> tens of millions of dollars >> wait we're talking after tax >> they they sold it went to cash and they were like hey I need help yeah so I mean those those are crazy stories but it's like that's we can say wow and it's like wow it's a crazy outcome but we >> wait guys you're saying if you $10,000 into crypto, you could turn it into tens of millions. >> Yeah. Which coin to invest in. I saw on your channel there were some comments about an ICO that we should be buying. >> Those comments are the worst. But seriously though, we we also get people who have actually literally won the lottery by buying lottery tickets. And so it's like people get windfalls from all sorts of different weird lottery is not as weird. I think crypto ones are are stranger. But yeah, people end up with piles of money for all kinds of weird reasons. The one thing I found very interesting is that you recently said that the more you look at your portfolio, the worse you're likely to do. And then I thought of myself where I look at my portfolio probably five times a day. [laughter] It's It's actually strange for me not to have checked it before we filmed. I I I check it. >> Are you Are you okay after not checking it? Do you feel okay? >> I'm curious what it's doing because there's 10 minutes left to the market and I like to throw in some buys at the end of the day if it's down. [gasps] >> Yeah, that's a real sign. What does it what does it say about me that I check so often? >> Uh it's honestly it's probably leading you to take less risk than you otherwise would if you were like me and just didn't look at it. That's what that research suggests. It suggests that people who check their portfolios more frequently are more worried about risk because they see the volatility daytoday or or minute to minute throughout the trading day >> and it makes them more averse to risk. So, what we're going to do for the channel members is that at the very end, I'm going to show you my portfolio and you'll be able to rate it and you'll be able to be brutally honest with what you think of my allocation because I have a feeling I know what you're going to call out. And there's there's something in my portfolio that the channel members will see that uh you're probably not going to like. >> Okay. But moving beyond that, in terms of the general economy, do you think it's easier or more difficult for people to get wealthy in 2026, 2027? >> I'm not an economist. I don't study the the macro economy. I can tell you what what we see with our very biased sample of people who are becoming wealthy. There are still a lot of people starting businesses. There's still a lot of people raising capital. there are still a lot of people participating in the equity of companies uh like like some of these AI companies that are still private or or uh maybe going public soon. Like there's still a lot of wealth being created. Now again, I'm not a an economist. I don't study the the lives of everyday Canadians or Americans. Is it easier or harder for them to to get wealthy? I don't know. But I can tell you from our our again acknowledged as a very biased perspective as a firm that deals with people who are getting wealthy or or who are wealthy uh it does not seem like that has that has decreased. >> Do you see any risks to our economy that you think people are overlooking? >> Tons of risks. I I think it's very easy to get bogged down worrying about questions like that and I think a lot of people do. Like when I when I posted my video recently on the biggest myths in personal finance and I mentioned that savings myth that you should save as much as possible, a ton of the replies were that well in this economy it's different. You need to save as much as you can because the future's going to be awful. It's like maybe maybe it is. I think being an investor inherently requires optimism. I think if you're not optimistic, you're not going to be a good investor. It ties back to the checking your portfolio too much. Like if you if you just invest in stocks, don't look at your portfolio, save what you need to save, and don't worry about it, you're going to be a better long-term investor than if you worry about whatever thing. I mean, the funny thing is, right, you could have you could probably you could have 10 brilliant economists on your podcast who would all give you some crazy niche reason about why everything's about to collapse. And maybe they're maybe they're right to an extent. Maybe they're not. Maybe it's already priced in. I don't know. Um, and those things are interesting to to hear about, but are they actionable or useful for investors? I don't I don't really think so. So, I don't worry about I don't worry about that stuff too much. >> What do you think about Pokemon cards as an investment? >> I saw that episode, but I have not listened to it. I don't know, man. Lego. Lego is another one that apparently has had great returns. I did listen to your episode with uh Ben. That was cool. That was a cool one. Uh, but yeah, there's all kinds of weird stuff that you can show like look how well this person did investing in this weird thing. I think collectibles as a general uh as a general asset class. Wine is another one that comes up. Uh cars is another one. There's all kinds of weird stuff. It's whatever. I think a lot of those asset classes are are pretty thinly traded. I I really like advice that works in equilibrium. Like you can kind of tell everyone to invest in index funds and that that works. They're participating in the market portfolio. You can't tell everyone that they should have a 10% allocation to Pokemon cards. market will explode. >> Now, speaking of being well diversified, I think a lot of people also look at their house as an investment. What are your thoughts on the current conditions of the housing market? >> I I I do know the Canadian market better than the US market. Uh I know housing costs are high everywhere and they've been going up and that's that's a challenge that's true for both renters and owners. But beyond that, I mean, I I think that the the housing decision, how much housing you should buy and whether you should rent or or own it, I think the assessment of that is still the same as it would be under any market conditions. >> Even though now the monthly payments are so much higher, the prices are so much higher. What's surprising to me is that when you look at the income ratio needed to buy a house, it's the highest it's ever been in history. And so I tend to argue that maybe conditions today are not as they were 5 years ago, 10 years ago >> because housing costs have gone up or because the rent versus own trade-off has changed >> purely because prices and the carrying costs are so high relative to what the average income is. >> Yeah. I mean I I agree that is a challenge, but I mean people still have to pay for housing. So I I don't know how I don't know how it changes the decision other than maybe you have to live in a smaller a smaller place than you would have 10 years ago. Do you consider a house to be an investment? >> Uh, not an investment. An investment. I would say it's a consumption good. It's a mix, I guess. When when you buy a house, you're buying uh you're consuming part of it, but you're also investing some of your money in a real estate asset. So, it's a it's a it's a combination. I I I think the big benefit of buying a home is that it provides a hedge to the cost of living in that specific home. Say you to live in a very specific area that you want to stay in. If the cost of living in that area go up, rents are going to go up a whole bunch. But the other thing that's going to happen is that real estate prices are probably going to go up. And so if you own a house, you're you're hedged. Housing costs went up in that area, but so did the price of your asset. So you're protected. Whereas a renter might get priced out of their home. That that to me is the best argument for owning. >> It's like insurance almost. >> Yeah. It's kind of like insurance. It's it's like there's a a really cool paper that asks that question. why do people invest so much of their net worth in their home? And they come to the answer that it's because it behaves like a long-term bond that's perfectly indexed to the costs of living in that specific home, >> which is a pretty cool way to frame it. Now, I think that the other side of that argument is that just like a long-term bond, while it might produce coupon payments that that meet your cash flow needs or whatever, in the interm, in the short term, it's going to be very volatile in price. Long-term bonds are super volatile. Individual home prices are also super volatile and I think that leads into uh how long you want to stay in a place. If you want to stay in a place hypothetically forever and you want to make sure that you're not going to get priced out of that house, the only option is to buy. But if you might leave in 3 years between transaction cost and price risk, I think renting starts to become pretty appealing. >> You have a very interesting equation. I've never heard this before that determines if you should rent or buy. Explain what this is and who should be using it. >> I called it the 5% rule. That's what you're talking about. And it's not always 5%. Some people got mad about me about that. It's like, well, it should have been 6% or 4% or whatever. But I I'll explain the the premise and people can figure out what number makes sense for them. It's bas basically the idea that there are unreoverable costs of owning a home. Just like rent is an unreoverable cost. You you rent a place for $3,000 a month, you pay the rent, you get a place to live, you have nothing left over. There's no residual value. when you own a home, people imagine that you buy this asset, it goes up in price and they don't they don't account for all the costs that you that you incur to live there. And so I think you have to account for those to make the rent versus own comparison. Uh and so I just thought about okay, if we take the property taxes, which are an unreoverable cost, you pay taxes to the municipality or whatever. Um and you get whatever a nice city or whatever, but there's nothing there's no residual value. You pay maintenance costs, which are just the cost of keeping the place running. your video on your real real estate returns and your your kind of misadventures if we can call them that in real estate maintenance cost was a huge part of that it was >> where people just they don't account for it and it's all the little things I thought you did such a good job in that video because all those little things that add up to like holy crap I paid x number of dollars and spent x number of hours maintaining my house so maintenance costs and then the other big one that I think really gets ignored and you talked about this implicitly in your video Graham is is the opportunity cost of of capital if you have $100,000 of equity in a home, that's $100,000 that you could have had invested in the stock market. And that difference in expected returns between home equity and stock market appreciation is an opportunity cost. And then if you're using leverage, you also have the the cost of of interest. So you end up with a a weighted average cost of capital, but whatever. And so you add all that up and based on the numbers that I used in that video back then, I came up with 5% as a number. And all you do is you take that and you look at the amount of rent that you would be paying and you compare that 5% of the value of a home that you would otherwise buy uh to the amount of rent. And if they're equal, you're financially indifferent roughly approximately. Uh if but it it also shows you if owning is much more expensive. Maybe 5% of the property is whatever five grand a month, but you could rent a similar place for $4,000 a month. And it's okay. renting is actually pretty cheap relative to buying this house. And it can tell you the other thing, too, that may maybe renting is more expensive. So, it's it's rough. It's not perfect, but I mean, in analysis that I've done since then, it's it's actually pretty good. >> So, again, I think we're going back to the math versus behavior. Yeah. And I think there are also intangible benefits of owning a house that even for myself I try to account for because I put myself in the position where mathematically I think it's better to rent right now. But then I think realistically could I be happy renting a house? And I think for a home that you intend on keeping or staying in 10 15 years, I don't know if you would be happy or at least for myself renting a home for that long and not being in control of that house and like what you do with it and the fixes and the you know moving a you know changing a bathroom. So where do you build in the intangible benefits? >> I think a lot of what you just described is actually a trap that people don't account for. The perception that you have control and can do whatever you want. It seems really compelling. Listen, I've lived like I'm I'm in the middle of living this right now where we bought a house 6 years ago >> and ever since we moved in, we've been doing stuff like a bathroom, like a I mean, we we had one wall in the house that was never finished when the house was built. It's in a room with a really really high ceiling. >> And so we finished the wall and on that wall I put a full glass backboard basketball hoop cuz I was like that'd be super cool. Like we're doing this anyway. It's an extra whatever few thousand to put that. I'm going to do it and stuff like that's very fun. I would never be able to do that in a rental. And I love I can I can literally make myself breakfast and then go shoot hoops like right beside the kitchen, which is which is awesome. But every one of those little things is thousands of dollars of costs that I would not have incurred as a renter. >> So that's you can view that as awesome. Or you can think about are renters are people who rent their homes any less happy than owners when you look at the broad data. Like I again I've I rented with my family with a wife and kids for six years. We've now owned a home for 6 years. I don't think we're any happier as homeowners. Honestly, I think the added stress of home maintenance and managing all the renovation stuff we've been doing is probably a net negative relative to when we were renting and landscaping, man. Like, you know, I mean, you know, real estate better than I do. It's it's brutal. >> Uh, and then when you look at the data on this, and there have been studies in uh Canada uh and a few other countries that ask whether homeowners are happier than renters. There there is one American study too that it was a sample of 600 women I believe specifically. But asking that question are homeowners happier than renters? And the answer is generally no when you look at a broad sample of data and I mean that that lines up with with my experience. So I I believe it. It's good good confirmation bias for me. So it's like I that should be an intangible. It seems like that's a great argument. You can do whatever you want whatever you want with your house. But I really think it's a license to spend just ungodly amounts of money doing stuff that's not actually going to improve your life. And I say that as someone who's doing it right now. >> Another thing that I'm curious about is I posted on Twitter and it got a lot of attention. It got 4 million views. I said for those that have paid off their mortgage and own a home free and clear, do you have any regrets? Almost no one posted that they had regrets. There's a few people who had regrets that were very specific to paying off a mortgage that was sub 3%. But every single other person said that the freedom and the feeling they got by owning a home free and clear superseded anything else. And they said it was the best feeling in the world. What What are your thoughts on that? >> I've got a couple great anecdotes that speak to this. So in in Canada, we have to get Canadian for a second here for me to explain this. In Canada, when you take out a mortgage to buy a home, the interest is not taxdeductible. But when you borrow money to invest in an asset that's expected to produce income, like stocks that that pay dividends, the interest becomes deductible. And so sometimes we'll see a client who comes to us and they have whatever a million dollars in their portfolio and they have a whatever a $500,000 mortgage that's just borrowed to purchase the house non- tax deductible. and we'll we'll say, "Hey, you know, we could use some of your portfolio to pay off your mortgage." And then if you want to keep the mortgage, you can reborrow, reinvest back in the portfolio. You end up in the exact same place, but your interest is now taxdeductible. It's just smart financial planning if someone's in that situation. And I would say 95% of the time, there's one case where the where the person really did go through with it, but 95% of the time, they do step one, we we sell some of the portfolio, we pay off the mortgage, and then we're like, okay, now now we're going to go back to lender. We're going to we're going to reborrow and invest back in the stock market. And 95% of the time, the person is like, "No, you know what? I actually feel really good having the house paid off. We're just not gonna we're not going to reinvest in the market." Which is fine. That's great. that was the right decision for them, but it going through the actual process. At first, it's oh, this is a great idea. We're going to do it. And then they have a paidoff house and they have to make the decision to reborrow to invest and they don't do it. So, I I think that speaks volumes to your to your question. >> I wrestle with the exact same thing because I know at some point I want a house with more space. We have family to visit, uh, you know, with a bigger yard, things like this. And then I I wonder for that exact same purpose is that the the primary uh home deduction really is capped at 750 grand. Everything else after that, there are ways of borrowing, but it seems like the best thing to do is if you have something relatively liquid, use that to buy the house and then pull a margin and then buy back the position that you had sold to buy the house. And I wrestled with the exact same thing is would I would I do that regardless? It's like why am I not doing that now? Why didn't I do that 5 years ago? I think that lends itself to uh just the peace of mind that I I've never really controlled for peace of mind until recently that it just something clicked after dealing with all those rental properties where now I place a premium for just easy. >> Yeah. I I think there's a there's a lot of psychological benefit to having a having a paid off house. I also don't think people on the other side of the argument. I don't think people fully understand the costs of having a paid for house. Almost every video that I make on renting versus owning, people will say, "Well, the math changes dramatically in favor of owning once your house is paid for." As if it's better to have a paidoff house. It's actually way worse. >> Yes. When you look at the total cost of owning, including the opportunity cost of equity with a house that's been bought on cash or or is fully owned otherwise, uh, and you compare that to a renter, the fully paid for home is almost always going to look worse than renting and investing in the stock market. Mortgages bring owners onto the same level as renters. Um, but if you have a paid for house, it's it's costing you far more, which is the cost of of peace of mind, and there's nothing wrong with that. At what point does optimization just become not worth it? And I'll give you an example, a personal example. I was looking at doing a box spread, but I had some taxfree MUN bonds too. And so I was thinking if I do the box spread, I can get a capital loss. And then I look at my after tax return compared to what I'm earning from tax-free munis. And I'm doing all these like mental calculations. And then I determined through Claude analyzing every single aspect that I would be saving 0.02%. By doing all of these like things and I think like the net amount was like it was a negligible amount. I mean it's the difference of uh you know a few hours in the market up or that's really what it was. When could people take it too far? >> So I think it's subjective. I think in that case, you've got to look at the amount of time that you spent doing it, but you've also got to look at how much you enjoyed spending that time. I think it's an interesting example because you might have really loved saying that you did a box spread >> and maybe that's something you could talk about in content or whatever and maybe that's a reason that it doesn't matter so much. >> Um, but if you account for the cost of your time in in that scenario, you're maybe a ne negative even. So, I think people have to account for time, but it's also highly subjective just based on an individual's preferences. We we've brought uh really good tax planning to to some folks that that work with us uh and shown, you know, you could save over your lifetime, whatever, hundreds of thousands of dollars in net present value of tax by doing this thing. And some people say that's great. I want to I want to implement it. And some people say, you know what, for a few hundred,000 is just not worth the complexity in my life. >> So, I think it's highly subjective. But I think in general people do get bogged down in the details and try to optimize things when they should just be, as we talked about earlier, buying index funds and not worrying too much about it. I have to say though, for the few people who this applies to, this will save five people, could be hundreds of thousands of dollars. If you're buying a primary residence and you have a few million dollars minimum in a brokerage uh that supports options, you buy a house, primary residence with a box spread and take a capital loss on it. It's not financial advice, but look into it. The few people this applies to. It is mindblowing. No one knows about it. It's very complicated to explain. It took me days to wrap my mind around how this thing works. It is incredible. It's like uh it's it's a superpower to be able to do that. You get borrowing right now net after tax high 3%. It's [snorts] crazy. Fixed interest only. It's incredible. But it applies to like five people watching. So I'll end it there. What does money mean to you? Uh money is a tool that lets you buy time. I think is really its fundamental purpose in our lives. That's that's really it. It's a It's a tool. You you you work or or or start a business or or create an asset or whatever to to create money, but what's the money actually for? Is to give you ownership of your time. >> And so, how do you use money to produce more time in your life? Like, what are the main things that you spend money on that you've noticed improve your happiness the most? >> There's a whole bunch of things really. I mean, we we uh we had one vehicle for years. We have I have four kids. M >> um we had one vehicle up until 2 years ago. We finally got a second vehicle because there would be cases where whatever you had to wait for the other person to be done with the car. So that was that's a big expense, but it's been it's been really useful uh just for time use and not having to wait for wait for the vehicle. Another big one is meal prep, meal delivery. We we get uh prepared meals delivered to our house every week so that we don't have to worry about cooking. And that's something that we did that years ago and then we moved to a more rural area. We couldn't get it delivered out there anymore. And just a few weeks ago, I found a service that does deliver to our our address and so we've been doing that again. >> Personally, I don't know if you guys do that, but I find that to be >> cook unity. I love it. Okay. >> I just got it. I actually brought it to the warehouse today. >> I find it so it just takes such a mental load off not having to plan your grocery shop, not having to actually cook and clean up and all that stuff. So that that for me is a is a big one. Uh and but then also so there's time saving and then there's also how you use your time. Uh and money is a tool for that as well. Uh we went on a a family trip to the west coast of Canada this summer. It was the first big trip we've taken with all four of our kids on an on an airplane and all that stuff and that was incredible. Trips are cool because the anticipation leading up to them brings a lot of joy. The actual trip hopefully it goes well. Ours did. Brings a lot of joy and then the memories give you lasting joy. So, I think stuff like that is is great. And then I spend money on uh on equipment like I've got a kayak and a mountain bike and all that kind of stuff. So, those are the really the big ones. You have a really interesting video that I've probably watched at this point three or four times, which is how money relates to happiness. What were the the the findings of this? Cuz a lot of it was backed in science. And so, it's nearly, you know, undisputable. I mean, there's evidence and data that suggests that certain things actually do produce happiness and certain things negatively affect your happiness. What did you find out in the making of that video? >> Yeah, I think a big one that people often don't know until they see the research is that the relationship between money and happiness, if you just look at income levels and happiness, there's a very weak relationship. Some older research suggests that there was a plateau where above certain levels of income, you don't get any happier. more recent research has found that it it does continue to increase but the relationship is very weak. Uh I think that's the part that gets missed even in with more more updated research that the research the new research shows okay if your income goes up whatever from 100,000 to 500,000 there is there is a bit of a happiness increase but it's not meaningful for a big jump in income it was like five points on 100 point scale of happiness like we're talking about nothing crazy there was there's another stat from one of those papers that talked about how a big income increase was about equivalent to a headache in terms of effect on happiness so I think that that really messy relationship with between happiness and money is is really important. The other stuff I talked about in that video that I think is meaningful is time versus money preference. People who prefer money over time tend to be less happy. So if if you're given the choice between having a little bit more money or a little bit more time, people who choose time will tend to be happier people. They also tend to have better relationships with their spouses. And there's a few other data points in there like that. Uh the data on social comparison I think is so important. If you have people around you who are wealthier, who have a nicer house or a nicer car, that tends to really decrease your happiness. So interesting implications of that [clears throat] like who you spend time with. I think this happens as people get wealthier, they start hanging out with other wealthy people and there's always someone wealthier and so you end up feeling bad about your level of wealth and your position in life. I think that's really important. It has implications for where you live, too. Like buying a a not so nice house in a really nice neighborhood might not be the best idea. I think those are the those are some of the biggest takeaways. I'm I'm curious what you've watched three times now. What are your biggest takeaways? >> I mean, I always heard about the commute, you know, and that was kind of interesting to hear about. And then I thought the time and the money thing was the most interesting out of everything that you covered in the video. What in the research of finding the happiness and money relationship, what have you practiced in your own life that has made the most meaningful impact? >> Definitely having a preference for time over money is >> so what does that mean in application? I >> if there was something that that I was offered that would give me money or or or save me money or I could choose to have more time with my kids and and my wife as a rule. Usually I'll take more time with my kids. Being here with you guys is a bit of an exception. >> Not that we appreciate it. >> Not that I'm getting paid to be here, but it's, you know, it's a business trip. So, but that's a case where you look look at the the perma model that I mentioned earlier. Positive emotion, um, uh, engagement, relationships, meaning, and accomplishment. Relationships in my family are super important, but so is so is accomplishment. So is engagement. and trying to continue to build my my my YouTube channel and and uh my ability to create content is important to me. So anyway, I had to make that trade-off. Am I going to take a few days away from my family to come out here, which I did, but generally speaking, uh if an opportunity comes up or like, hey, you do you want to come do this? Do you want to come do this speaking engagement? Um do you want to come to this conference? Usually, I'm going to turn that down. >> One of your top comments on that video I thought was really interesting. It's always remember that money is just a means to an end. It's not an end in and of itself. So, what does this mean to you? >> It's like I said earlier, money is a tool. It's a tool that lets you do stuff, but I think you have to understand what it can do. And and you've got to understand what the research says about the best ways to use money for it to be a useful tool. I think a lot of people end up amassing huge amounts of wealth, but are unhappy. I think it's a very common a very common story for for lots of different reasons. Uh but yeah, there's a there's an old paper that I based portions of that video on uh called if money doesn't make you happier, you're not spending it, right? And the premise is just that, you know, you can have a ton of money and engage in activities that don't make you happier. But that's not because money doesn't improve happiness. It's because you just don't know how to use money to make yourself happier. So I think being in tune with what you want out of life, what your priorities are, and what the evidence says about the type of spending that is is most beneficial is really important. At what point does increased wealth start to see diminishing returns? >> I I've I've heard you guys talk about this this question with other guests. I've thought about it a lot. I've seen a lot I I you know I I've worked with and know a lot of very wealthy people and I really think it depends on the person. >> Like there there are people who have and I'm not just talking about the people that I know, but there are people who have tremendous amounts of wealth >> and are still wondering if they can spend a little bit more and still be okay. And then there are people who have whatever 5 million, 10 million who are just perfectly content. So I I really think it does depend on on the person and and what their objectives are and what their perspectives are. But I I don't know if there's a single a single rule on that. >> Was there a moment for you? >> I don't think I'm there yet really. Like I don't think if I stopped working right now, I'd probably have to make some changes to my lifestyle that I wouldn't want to make to to be okay for the rest of my life. And I Yeah. So, I'm I'm not there yet. >> What's interesting to me in in doing the research on you for this podcast is that while finance may be the thing that you're a professional in, it seems like the thing that you're really passionate about is philosophy and like the psychology of money, at least based off the content that I've watched of you. What has been like your single greatest finding in that whole adventure you've gone on researching that? >> Oh man, I don't know if there is a single greatest finding. Maybe the single greatest finding is how important that side of finance is to people's actual decisions. We can do find all the research on why index funds are good and covered calls are bad or whatever. Um but none of that matters if it isn't uh if it isn't connected to the psychology of the person making a making a decision. So that that's I mean it's a good question and I think really when I think about it the answer is that those two things are are connected. They're they're intimately connected. I I set up my video, the the the using your money to be happier video by saying like, "Hey, this might be this might seem like a weird topic for a chief investment officer and like a a quantitative finance person to be talking about, but all of these important financial decisions that I'm always talking about are they're like you said earlier, they're means a means to an end to achieve the life that you want to live." And so for all of the quantity finance research stuff to be useful, it has to be anchored in uh in people knowing what they're trying to achieve. >> It is a means to an end to achieve the life that you want to live. But then you also talk about the life cycle model which is trying to even the curve of happiness and then using money to kind of flatten that. Can you explain a little bit more on that? >> Yeah. So the life cycle the life cycle model is just the idea that people want to smooth their consumption through their lifetimes. And if you think about your lifetime earnings, typically people are going to have lower incomes when they're younger and their incomes are going to increase as they get older and get into the peak of their careers and then it's going to decrease a little bit as they stop working and then it's going to stop. And so the idea of the life cycle model is that uh people want to smooth their consumption throughout their lives, which means saving less and maybe even borrowing early on in life, which is super common. Like people take mortgages, they take student loans and all that kind of stuff. Like I think it it describes reality fairly well. And then as you start earning more throughout your career, that's when you start saving. And then as you get into retirement, that's when you start disaving or spending your your savings. The real world implications are one of the things that we talked about earlier, which is that maybe young people shouldn't save that much and should be comfortable borrowing, which I think like again like I think people do that. They take student loans, they take business loans. I think that's a that's a pretty I don't I don't think it's controversial to say. Uh, but then the tricky part is you do have to start saving eventually throughout your peak earning years and you've got to save enough to be able to retire. But that's that's the concept. >> What do you think is an appropriate safe withdrawal rate given today's valuations? >> I' I've made so many videos videos bashing the 4% rule, so people are probably going to be like pulling their hair when I say this. 4% is probably fine, >> but it really depends how you're using it. However, I I don't think it's safe to actually literally spend 4% of your starting portfolio value adjusted for inflation for whatever 40 or 50 years. >> But I also don't think that's what people will actually do. I think people who who are actually retired and living off of their portfolios, and I see this, we see this with our clients. >> If the financial markets are not doing well, people will scale back. They'll go on a less nice cruise. Maybe they'll skip the cruise altogether that year. they'll they'll give their kids a smaller down payment for whatever. >> People will make sacrifices, they'll cut back. The whole premise of the 4% rule and the way that Bill Ben did that analysis and the way that all of the analysis replicating it since then has done is is spending the exact same amounts adjusted for inflation every year. And there's all kinds of other stuff in there, too. Like even if people don't cut back spending when markets are bad, I don't know if it's true that people are always going to perfectly index their spending to inflation. So, yeah. Anyway, but I think as a guideline, if you're trying to figure out how much can I actually spend for my portfolio, uh, or how how much roughly can I uh do I need to have saved to fund my retirement safely, 4% is probably fine. But I only say that on the on the basis that people are not actually going to follow the 4% rule that they're going to follow some more flexible spending uh spending path. If it has to be fixed, if someone says I want I want a number that I can spend that dollar amount adjusted for inflation for the rest of my life, I'm probably closer to 3%. >> That's how I've modeled the two. It seems like the 4% rule, he actually came out and said it was actually more like 5 a 12%. >> Well, he he's he changed stuff, right? He he went at it in small cap stocks. He he's done he's modeled different scenarios like in this in this inflation environment, in this valuation environment. He's done tons of tons of stuff since then. I think that the most useful research that followed Benginans was the research that looked at international stocks. The US market like we know looking backward that it is the best performing stock market in in history. And so to look at the history of the US market even yes they had the great depression which interestingly that's not the year that breaks the 4% rule. Do you guys know that >> it was the 1970s? Correct. >> 1968. >> Yeah. >> That's the worst period to retire anyway. That's because inflation was super high not because returns were low. I love that that point. >> Uh anyway, even with the Great Depression, you look around the world, returns have just been lower than they have in the US. And when you run the exact same analysis that Bill Dangan did on other markets, you get a lower number universally. I think Canada is the closest. Maybe New Zealand was up there, too. I don't I don't remember. But most countries and the world index, which includes the US market at its market capitalization weight, do not support the 4% rule. So that to me is like yes, Bill Bang Bill Bangan did research that is practically so useful because it gives people quick napkin math to figure out how much they need to save for retirement but it was based on US history which we know after the fact to be exceptional. >> So I was modeling it 70% US equities 30% international for someone retiring in their 30s. And it seems like, by the way, what's interesting is that after about 40 years, there's no downside of modeling longer. Like if you live to 150, after about 40 something years, it doesn't matter if you live to 80, 100, 200 years because your expected return over time is going to be so positive that it that it doesn't matter beyond that. But when I was modeling that scenario through also world markets, it came out to 2.75% would have a 99.9% success rate uh success ratio. Success ratio I can't say that. >> Yeah, that sounds reasonable. There's a paper that came out recently that uses uh a simulation technique called block bootstrap. But basically they they take actual historical returns for a whole bunch of stock markets around the world. They have 39 stock markets in there and and bond markets and they use that to create a million simulated possible outcomes. So anyway, it's a it's a good without getting into the details, it's a good simulation technique that gives you a realistic distribution of outcomes based on actual history. And they found that the 4% rule, I believe for for a normal American retiree, the 4% rule had a failure rate around 7%. Hm. >> So it's I mean it's probably similarish to your numbers if you if you did the same type of analysis. >> But you think broad-based average person spend fixed amount 3% for a long retirement for someone who wants to retire early. >> I think that's I think that's reasonable. I did one video where where a paper by those same authors but a different paper. >> They looked at just uh domestic stocks. They didn't include international stocks. Now domestic stocks in their setup is not American stocks. It's the stocks of any domestic country from the from the perspective of any investor in one of the countries in their sample. So the way they do their sampling method is they'll pull on average a 10-year block from maybe it's the US and then they pull another block from another country. So maybe it's 10 years of the US and then maybe 12 years of Canada and then maybe four years of Italy. And they keep running this until they have a run of returns and using only domestic data. So that means returns of the stocks of a country measured in their own currency. Uh they found a 2.7% I believe saved with draw rate. But when you introduce international stocks, at least in their historical data, it's had a big a big benefit. >> I feel like a lot of what's discussed in this podcast is still not necessarily actionable and applies to so few people. So, if someone's made it this far and they still haven't walked away with one single decision or habit or behavior that they should have, a decision they need to make about their own finances, what would you say is the safest overall advice or thing that you would do if you were them? >> If I'm a random person listening to this podcast, I would probably stop checking my portfolio five times a day. I would probably invest in a globally diversified portfolio of of index funds and not worry about it. So I would stop dabbling in individual stocks and covered calls and use that time to invest in my human capital. >> Man, Jack, >> there you go. >> But honestly, those are probably the big ones that for for most people, that's such a huge portion of it. Pay off high interest debt. We haven't talked about that at all, but if people are o overspending and ending up in credit card debt or or unsecured consumer financing that's costing them whatever six or seven% a year, paying stuff like that off is an easy win. Uh but for what we've talked about, I think not checking your portfolio too often. Being optimistic, maybe that's the easiest takeaway, being optimistic and not worrying about a lot of the stuff because, and I know we can't predict the future and maybe it's possible that the apocalypse is coming. I don't know. But I think investing is predicated on optimism. >> Which is more true? That happy people make more money or that money makes people happy? >> Oh yeah, that's a great question. >> I don't know. I don't know if we have research that that uh untangles that that question. I don't know. I think there's probably a relationship. I think happier people probably do make more money. that that that later paper that I mentioned that found that there is no plateau on income did find that there is no plateau for happy people. So for happy people, people who are generally happy their their their happiness set point is higher, their happiness tends to increase log linearly with more income with no end. Unhappy people do have a plateau where their happiness increases up to a point and then it stops increasing. So maybe that maybe that does answer your question. >> Is there anything that you wish we asked you that we didn't? And do you have any questions for us? >> No, I I think your questions were I think your questions were great. Co covered a lot of the stuff that I've talked about on on my channel. Uh a question for you guys would be, is there anything that I have not covered on in any of my content that you'd like to see me cover? >> I always find so these are the videos that are doing really well right now. Is these videos is2 to3 million enough? the they're blowing up. I'm seeing everyone making these videos and they all do well. I'd like to get your perspective on the ideal amount of money to have and aim for and what that means in terms of spending. >> The other concepts are levels of wealth. They always do well right now and it seems to be a trend of like, hey, what does a million buy? What is $5 million by? What's $10 million in retirement look like? And you cap it at like 10 to 20 million. like what does a $20 million retirement actually look like in practice and what does that get you >> and how does that differ from five content I would love for you to pull some of the people that have their wealth with you >> and you could then have your own data >> oh yeah >> about happiness as it relates to different amounts of wealth that would be really interesting because I know that Dave [clears throat] Ramsey pulls a lot of the people that >> listen to him and he says oh we've made this amount of millionaires you could do something similar with happiness and wealth. >> I'd also like to see you do investment breakdowns. Like Humphrey Yang has recently been doing subscriber portfolio reviews. >> I think the money guys have also done portfolio reviews. I'd like to see you take someone's portfolio and break it down and say, "This is what you're doing right, this is what you're doing wrong. Here's the age. Here's what I'd be improving on." I think that could do quite well. I'd like to see those videos from you. >> Those are good ideas. And then more flames in the thumbnail, preferably >> and more hey videos about Graham. >> All of those things that is that makes >> yet to see flames in your thumbnail. And they do that [clears throat] does increase CTR substantially. >> You know what's funny? Back in the day. Yeah. Uh this is back like Santa Monica time period when I was living in Graham's guest house and we would meet up every single day and discuss titles, thumbnails, strategy, what's go what's working on YouTube, what's not working. And the term that we used for thumbnails was Armageddon [laughter] is what we would call it. And if you look back in like 2020, 2021 at Graham's thumbnails, like there was a a very popular image we would use and we would use it as a background and it'd be like red flames and blue flames like hitting colliding colliding and it was just like the battle of good versus evil. And it's like why I'm cutting up my credit cards. It's like you know why I'm canceling my Chase Sapphire Reserve and then in the background it's just like some atomic bomb going off. No one was doing that at the time. And I remember we did this and we're like, "Holy crap, this is we found it. >> We found it. We found the unlock the cheat code of YouTube." And I remember what we would do is we'd post it and then I'd sit there and I'd scroll on YouTube until my video comes up and it would just you would see it. It was like this nuclear radioactive bright blue and red in your eyes. It was blinding. But I'm like, "Oh yeah, people are going to click on that." And they would. I love you guys joke about that. So, >> some something you guys didn't ask me about. I don't know if you guys want to talk about this or not. >> You can obviously edit out if you don't, but uh >> my hesitation to come on this podcast. Uh yeah, we we said we might talk about that, but we haven't. So, I don't know if you would love to talk about that. Yeah, because we're open. You know, I I had commented on a podcast before that I watched your video about money and happiness and that I loved it. And then I don't know if that was you or a member of your team that had commented back, oh, this is great. sort sort of got into contact from there, got into a group chat, and then everything was good, but then you had messaged us, hey, I I think my team has some reservations about me coming on the podcast. We would love to know why. Hey, by the way, really quick, if you want extra content just like this, as well as early access and a bonus post show posted every single week. Feel free to join as a channel member to get immediate access to all of that, as well as early access to everything else that we post along with priority responses to all of your comments. So, if that sounds cool, feel free to join. Would love to have you on board. Thanks so much. We'll get back to the podcast now. >> Everything was good, but then you had messaged us. Hey, I I think my team has some reservations about me coming on the podcast. We'd love to know why. >> Yeah. So, I' like you, like I've known you, your videos at least for as long as I've been making content because like we talked earlier, we started around the same time >> and I I always thought you were fine. Like the clickbait title, the flame titles for sure. That that was that was a thing. >> Thrilled about that either. But my my my team at at PWL when I said, "Hey, I think I need to go on this podcast." There there was a lot of like, "Whoa, like wait, wait a second." And a lot of it was the the clickbay stuff is a little bit of the issue. I agree with you on 100%. You think I like I hate it. I absolutely hate it. And I've been upfront about this. I do not like my titles and thumbnails at all. But I look at it also from a perspective of what are people watching? What are they clicking on? What's getting reach? And I have to do it. I have tested at this point probably across three channels, maybe four channels, >> three to four or 5,000 videos over 9 years. And I constantly AB test. And if I see something perform better, I go with that. Like by default, I just want the video that has the highest CTR possible. And so I've consistently found unfortunately the flames in the thumbnail, sensational title gets the highest CTR. And I hope I balance that out in the video content itself where I'm really balanced. Like if you actually watch the video to the end, it's never, okay guys, we're going to sell here and we're going to buy here. It's always here's the pros, here's the cons. And my thought is just, and people joke about it, it's dollar cost average into an S&P 500 index fund with international diversification. Save as much money as possible. doing like every video ends with that, but the packaging is so much to be able to get people to watch the video to get to that point. That's how I justify it. So, >> so I I I my experience is the same. I don't maybe go as far as you do, but I do get comments from my audience as well. They're like, I can't believe you're doing this clickbait stuff, and I'm just like, listen, >> I AB tested two thumbnails. Yes. >> And this one, I hate it, too, but this is the one that got clicks. Like, I'm sorry. >> Like, don't hate the player. Hate the game. Basically, >> that is what it is. know with a lot of that, you know, I I I see certain comments and I take some into consideration, but I constantly AP test. I test three thumbnails and then usually I'll test like five different titles and I find the package that works. >> That all makes sense to me. And obviously I I came so like I >> I'm comfortable with with all that even before hearing you guys explain it. Um what what I ended up doing was going to my we have a community. It's free. I mean we're not very good at monetizing. We don't monetize at all really. It's it's all the financial benefit of our content channels is that it raises awareness about our business and we occasionally get clients from it. We've never taken sponsorship money anyway. So, we have a community around our podcast. It's got maybe 20,000 people in there. Super active. It's a it's on a discourse like the forum platform. >> Uh but it's a very like tight-knit community of people who are like you mentioned longtime viewers like a lot of those. >> So, I posted in there like, "Hey guys, I'm thinking about going on this podcast. What do you guys think?" There's a whole debate and everyone had their opinion but I think the consensus was like listen >> regardless of what you think about the podcast even if we say even if we agreed and they didn't but even if we agreed that it's a a bad podcast if you go on and spread good information it's a net >> good thing and I was like you know what man that's and I don't think this is a bad podcast I've listened to it >> yeah that's fair >> um but I was like that's that's enough like I'm so I went back to the team and I was like all right guys we're doing it >> I appreciate we try to be as balanced as possible and I worry even that some of the guests we have on paints us in a certain light because just like you coming on here is a representation of you, the guests that we have on are representation. >> Yeah. To >> of us. >> So like like we'll bring you on and then we'll bring to >> the way the way I see it is it's the same thing as like a journalist having a conversation with someone. I like to think that the people that we bring on the show, it doesn't mean that we endorse what they have to say. It just means that we're curious and we think that it could be entertaining some and some we think it could be beneficial. I think this one is a nice hybrid of both entertaining and beneficial. But a lot of the ones that we bring on are just straight up entertaining and we have clvicular on. Do I think that people should be following clviculars? No. You know what I mean? And we're upfront about that. Like we'll respectfully challenge our guests when we think it makes sense and sometimes we we don't when we kind of agree. But, you know, no one neither no one here is proclaiming to be some sort of a guru. Like I, you know, just a random 27y old guy, you know, random 45year-old guy. Uh, so yeah. >> 70-year-old guy. >> Yeah. So, I I I wouldn't take anything that we say for the gospel, but if you can tune in every Sunday and be entertained or sometimes educated when someone says something smart, then I think that that's good. >> I I'll tell you guys, I I I had not heard of your podcast. Uh, someone sent it to me. It was an email exchange, not a comment that uh that I ended up here from. Someone sent it to me, a friend of mine, hey, you're on Ice Coffee Hour. And I was like, cool. I knew I knew who you were, but I I'd never heard of the podcast. And since starting that conversation, I've listened to, I don't know, maybe 12 episodes, which is a a serious time commitment because they're long episodes. >> Uh, and I think you guys do a great job. Some of your guests are like I'm like, man, this the stuff this person is saying is crazy. >> But like you said, I think you guys do a pretty good job of being balanced and asking good questions. We try to go in so neutral, but there's also only so, you know, so much that we could also account for, too. Like, we've had a lot of people on uh politically that are on the right, but we've really tried to balance it out with the left. It's just the ratio of >> the type of to go on a podcast >> tends to lean right. And so, like, we try to balance it out, but at a certain point, it's like, are we not going to have this guest on because we can't get the equivalent on the other side? No. Would we like the other side? Absolutely. So for me it's not about it's not about I don't want to be on a on a right-leaning podcast or a left leaning podcast. For me it's more like I don't know if I want to be associated at all with people who are that divisive on either on either side. >> I see your perspective but the difference is that like how are you to learn if you don't put yourself up against adversity which is why we bring on people that have different opinions. If we had every single Sunday we we rotated between you and the money guys and Jordan Hamill then it's like what are we really learn? Like I'm not learning anything at that point and neither is the viewer. And so I think what's great is for this podcast, not just trying to pat ourselves on the back, but like a viewer can tune tune in and be enjoy the very few of them enjoy Graham and my our presence. Meanwhile, we introduce them to a wide range of opinions. And this is great because a lot of the people if you tune in to a conservative podcast or a liberal podcast or you tune tune in to just Grant Cardone who tells you to leverage everything and spend everything on, you know, you're increasing your education or you tune in to George Camel who says you shouldn't, you know, borrow money to buy an investment or whatever it is. Like if you pigeon hole yourself with a certain ideology, then you you never actually grow. You need to challenge your beliefs. And that's what I think is great about this podcast is that we don't proclaim to have like any super super strong beliefs. I mean, I do, but I generally don't show it because I think it's more about the guest and understanding a diverse range of opinion. And so that's why I think it's it's really interesting to have to be kind of like at the core of letting people hear out a bunch of different opinions to decide which ones they align with and which ones they don't. >> Yeah, it's an interesting perspective. I think I I view I view my role in running our podcast as being more of a curator of what people should listen to, >> which is a different perspective, but I I respect everything you said. >> Yeah. And we, like I said, we always try to balance it for a while. We had fun because we were so far ahead. We would post Grant Cardone and then Dave Ramsey right now >> back tobacks. We did we did Peter Schiff and Michael Sailor >> back to back. So, so we got opposites. And then I remember we also had someone from the Daily Wire. I think it was like Ben Shapiro and then >> and Destiny >> right after it was Destiny. And so it's like back toback. But what what happens we find it funny. We pissed off everyone. Like the people who didn't like Ben >> uh would comment on that one and then the people that didn't like Destiny would comment on that one. And so you'd always like every But you know what? At that point it's like come on. Like we just try to show everything and we're not there to like debate or push anything. We just want to talk to the people who we think would be an interesting conversation >> and I think you guys do a good job. I guess I'm I'm like I view myself as so far away from all of those people that you just named. I'm like do I do I even want to be Anyway, I'm here. >> I appreciate it, man. And >> we appreciate you coming and also thanks for like expressing the concerns with coming on the show. Like I wish at the end of the day, if anything, that people would just be more honest with the ways that they >> So then we can learn from it and we could try to to to grow. >> Yeah. And we're always open to feedback is the other thing. There's there's nothing I'll take personally. >> And all of these things are concerns that we should be made aware of because it impacts guests in the future and and our ability to really deliver the best show possible >> except if the feedback is to tell me to stop doing cover calls. In that case, cut. >> I do not agree. >> But I think now is the time, by the way, you to review our portfolios, >> okay? >> And I'd like your honest thoughts and uh this is for the channel members. So, I really hope you appreciate it. For everyone else, thank you so much for coming. I'll link to all of your information down below in the description. This has been such a joy because like I said, I've I've watched you now for pro it'll almost be 10 years at the end of this year. I think it'll be almost 10 years. >> Crazy. >> So, that's nuts. I really appreciate everything that you do. I highly recommend for everyone to subscribe as well. >> Thanks so much. >> Thank you to all of Ben's fans that are tuning into this episode. We hope that you enjoyed. Thank you to everyone that watches us every Sunday and sometimes on a Wednesday. Really appreciate. Would not be here without you. Till next time. The bulk of my wealth is Robin Hood shares. >> Do you keep your Robin Hood shares in Robin Hood? >> Uh, no. Um, we're building a financial super app. [music] >> Are you setting them up in a situation where the odds are are stacked against them to [music] actually make money? >> A lot of people criticize us because they think we incentivize active trading and prediction markets. [music] That's when you can kind of get into trouble. >> Get this. The richest 1% controls more wealth now than at any time in more than a half century. Alarm bells have started [music] ringing. There's a small circle of wealthy insiders that's benefiting from all the growth. >> How much has [music] AI changed the game? >> Humans overseeing agents, seeing how many agents [music] you can actually employ, including when you're sleeping. >> So, do you think though with Robin Hood eventually you could [music] have just a few people running the entire company? >> Um, it's that's just dangling the carrot, huh? [laughter] Heat.