Retire at 30? The Math Behind Making Work Optional

27:42How do I make it work? Then pick the one. Because both of these have significant downsides. You know what's going to happen? You and I are going to pick the one for Ryan. The downside is going to happen and Ryan's not going to be happy. I would much rather that Ryan decided which one he wanted to do. Does he want to wait or does he want to wait? If you talked about multifamily, I talked about multifamily. He still doesn't want to do the house hack. Well, then we know. Then we know that waiting is the better option. The one thing I want to talk about about waiting that people don't think about is remember, Ryan, that whole time you wait, the price of houses continue to go up.

28:19Yeah. Right. Because I think people are surprised they wait three years for a better time. And the opportunity doesn't seem as great as you thought it was because you forget about inflation. So don't forget that as you wait, you're going to have to beat the amount of inflation that happens on the house you end up buying to make that time value work in your favor. Right. And if the house appreciates beyond inflation, which houses in many parts of the country do, they appreciate at a rate that is greater than inflation, well, then you've got to pay that. And overall, it's hard to predict, right?

28:55I mean, we just had the Fed slash interest rates by half a percent. And if that passes through to mortgage rates, that could accelerate and heat up the housing market, which it slowed slightly, not a ton, but it slowed slightly. So that could accelerate things. Yeah. That means more buyers, everyone who's sitting on the sidelines waiting for interest rates to drop are now likely to be rushing into the market. There it is. And so that drives home prices up. We're not saying don't wait. You didn't say this, Ryan, but I kind of heard in your question that waiting seemed like no downside option or fewer downside option.

29:32And that's the one downside people forget. Yeah. I recently reposted a tweet. I forget who originally tweeted it, but you can see it on my feed. The person said, you know, I have a friend who sold their home at, quote unquote, the top of the market. And they've been waiting for home prices to fall so they can get back into the game. Problem, they sold in 2015. The reality is we have a housing shortage, a severe, severe supply shortage. and until that supply shortage is met, right, until supply can keep up with demand, given the long cycle involved in home construction, we are years and years and years away from solving the supply crunch crisis.

30:23And I don't use the word crisis lightly. The housing affordability crisis is a supply crisis. We lack supply. That is why houses are already expensive and getting more expensive. When you don't have enough of something, the price of that thing goes up. You're not the only one calling it a crisis. We recently spoke with Peter Malouk, the head of one of the top financial planning firms in the country in Kansas City. He recently co-wrote a book with Tony Robbins. And Peter said that this is going to take a while for this to work out. So you've got people who are big time financial planners worried about that issue.

31:01And we're not telling you to do it now, Ryan. I certainly don't want you. At least I'm not. I don't know what you're thinking, Paul. I'm not saying do it now. I am just saying make sure that you evaluate the downside of waiting. You know, so often when people ask, what should I do? And they're choosing between a couple of options. And I'm with you, Joe. Those are always they're tougher questions because oftentimes there's something that the person really wants to do, but maybe they themselves are not aware of it. And it's a lot easier to solve for, hey, I want to do X. How do I do it? But in a case like this, where a person is saying, hey, I'm evaluating between X and Y and Z.

31:42What should I do? Oftentimes, if it's two choices, I tell people to flip a coin. and then based on that coin toss, see how they feel about the result. Well, that's exactly what I do in my financial planning process. I would flip a coin and I would hide the result and I'd say, which one do you want it to be? Because during the time of that coin flip, you made the decision, man, I hope it's tails. Man, I hope it's tails. And then they would say, well, I hope it's tails. So what is it? And I would put it back in my pocket. I'd say, it doesn't matter. You chose tails. Yeah, I do something similar.

32:15My variation is flip a coin, see the result, and then immediately, how do you feel when you saw that result? Ryan, I think, though, you're looking at things the way you truly should be. At first, I wondered why you had$200 ,000 sitting in cash, house down payment. Nice job. Yeah. That was great. First, I was like, no, no, no. And then he gets to the question, and that was fantastic. I also like the idea of being, I don't like the idea of being house poor. I like that he brought up the idea of being house poor as being a problem, just like you, Paula. Yeah. I thought that if you're worried about that now, I can't think of a time that I ever bought a house and everything came in under budget.

32:53I mean, the house does. But then I spent three weeks at Home Depot and stuff I didn't expect. Like I walk in and everybody's whole place goes, Joe, you're back. Yeah, I mean, it's all the little things. You need window treatments, right? You need a garden hose. Any one of those things don't seem that expensive on their own, but the aggregation of, there were years when I was like, why do I even bother giving myself a paycheck? Why don't I just send it directly to Home Depot? I think there's another piece to this equation though, which is Ryan, I would look at your other goals and make sure that those are funded also.

33:35You talked about saving toward your HSA, which is great, 5 % to your 401k, 1 % to company stock. Based on the amount you have now, if you buy the house, will you be okay for the other goals? Because often, Paula, we look at these goals in a silo and we don't think about the Stephen Covey line from Seven habits, a highly effective people. When I pick up an end of the stick, there's another end of the stick that comes with it. And the other end of the stick is he's talking about being house poor. He might also be retirement poor, kids education poor, but whatever other goals he has poor, you may be poor in a lot of different areas when you score your dream home.

34:15And if you're okay with that, that's fine. But I wouldn't look at this by itself. I would evaluate this alongside all those other goals that Ryan's going to want in the future. Yeah, absolutely. And you know, it's a cool way to do this, Paula. What I like doing is pretending that he has the new house now and saving that money automatically there from his paycheck or from his checking account into an account that he can get his hands on so we can feel that tighter cash flow and he can feel what this is like. We would do this when clients had children. We do it when they bought a new house. We do it when they're looking at retirement and how they're going to spend money.

34:54We would eliminate, we'd vacuum out all the money besides that into other places so they could feel it. But the cool thing is if they went over budget instead of having bought the house already, now it's just sitting in a savings account, right? And if it feels good, now I have extra money for all those Home Depot runs that I didn't expect to have. Bam, good. Another problem solved. If it doesn't feel good, well, then you just built your emergency fund even more and you haven't made the move yet. So I like playtesting your accounts and your budget that way, too, to see if the cash flow really is what you hope it's going to be.

35:30Well, I would do the same thing with your time or with your wife's time. Just have her sit around for two hours pretending she's in a car? Yeah, exactly. Yeah, just sit in a chair with an imaginary steering wheel. She's like, don't talk to me. I'm not home yet. Don't talk to me. but you're sitting at the table. Nope. I'm in a car. Yeah. Unable to look at your phone. It's fabulous. Playing the radio, listening to podcasts. Exactly. Yeah. Yeah. She might want to do that anyway. Two hours a day, right before and after work, just have her sit in a chair, look directly forward and listen to podcasts.

36:07Perfect. Well, because oftentimes it's easy to think like, oh, it's just an hour of my day or it's just two hours of my day. Man, when you start incorporating something that's even an hour a day, it's big. It takes up a significant amount of your day. It does. That is a lot of time. Yeah, that is a lot of time. No, and I know what you're really saying, something much more like when you and I both spoke to Laura Vanderkam, write down your hours and what you do during that time and then decide what two hours of stuff goes away? Can I afford to have that two hours of like what tasks are going to go by the wayside?

36:45Yeah. And it has to be discrete blocks of time because little things, checking Twitter, you can do that in the margins, right? You do that in five minute increments here or there when you're in the waiting room at your doctor's office. It's grocery shopping. Yeah. It's grocery shopping. It's unloading the dishwasher. It's walking the dog. It's all of those things. It's folding laundry. It takes that time out of your day. Yeah. Agreed. I love worrying about it ahead of time though, Ryan. I think you're on the right track because so often I would get people in my office going, I think I made a mistake.

37:22I bought this house and now I'm house poor. What can we do? Well, thank you for the call, Ryan. And best of luck with whatever you decide. It is funny already, Paula, we have this theme of playtesting, right? I mean, Danielle modeling, Ryan modeling, like we're modeling these things. We're projecting the stuff into the future. When I was in high school, I was a little afraid of math. And then I realized that life is math and life is storytelling and storytelling often involves math. And to get the true story for Ryan and for Danielle, we just got to do a little simple math. And this math is fun because now you're projecting out for Danielle, what am I going to do between 40 and 45 and 45 and 50?

38:03That's awesome. And for Ryan, how can I make it project this time suck and this money that it's going to take for this house? Like, how can I think about these things? It's really powerful. All right. Well, thank you, Ryan, for the question. All right. We're going to take one final break to hear from the sponsors who allow us to bring you this show at no cost to you. and when we return, Joe is going to have to answer for his comments on VTSAX.

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39:32Welcome back. Our final question today comes from Kat. Hi, Paula and Joe. My name is Kat, long-time listener, first-time caller. A conversation that the two of you had in episode 535 regarding, is your DIY investment strategy holding you back, really confused me, and I was hoping you could provide some clarification. You were in agreement that a VTSAX and chill investment strategy is helpful for newbie investors, but that a more nuanced approach to investing is necessary once one reaches a certain level of investable assets if one wishes to maximize gains. Previously, I had been under the impression that, Paula, you were in favor of a set-it-and-forget-it approach to investing in index funds that track the S &P 500, and that you were largely opposed to working with a financial advisor.

40:24Joe, I think that any longtime listener knows that you see great value in working with a financial advisor. However, if you both agree that once a certain level of investable assets has been attained, VTSAX and chill is not the ideal approach, then please explain to us what is. A professional investment advisor? A robo-advisor? And how does one of those even work? Self-picking an array of index funds that track different markets that I've heard are doing well, since I don't have much time to do research regarding investments. And at what level of investable assets does VTSAX and CHILL stop being the wisest investing approach?

41:04Thanks to the VTSAX and CHILL approach, my husband and I went from$150 ,000 in retirement savings in 2018 to$700 ,000 in retirement savings currently. What points would you have us consider regarding investing to help us best maximize our retirement savings at this point in our investment journey? We thought we were taking the best approach until now, but now I'm not so sure. Any suggestions are greatly appreciated. For those of you watching on YouTube, I am sitting here with my VTSAX coffee mug. So I'm just going to be sipping. You know what, actually, Joe, do you mind if we take five minutes?

41:47I'm going to fill this with some mint tea to ease my sore throat. Oh, let's do that. And then I'm just going to sip out of my VTSAX coffee mug while I listen to your explanation of VTSAX and chill. By the way, the reason that we're talking about this so much, we're hyping this so much, is because apparently Joe has already had to go in and give some explanation to our Facebook group, our Facebook community. The Afford Anything Facebook community. I have. I'm not in your Mighty Networks community, but I bet based on the Facebook response that there were a lot of people that did not understand completely what I was talking about.

42:26All right. Okay. I'm going to fill my VTSAX coffee mug with some mint tea, and then let's hear it. Well, that went by quick, Paula. It flew by. So now, as the people on YouTube can see, I've got my VTSAX coffee mug with mint and honey tea. I want to give a shout out, by the way, to Refined by Fire, a listener of this show who gave me this coffee mug. You can see on it the – Oh, I see how it is. You can see the VTSAX stock chart from dating back to 2000. So, you know, you can see how, yeah, there's some – which means it includes 2008. You can see 2008, 2009 right here. barely a blip barely a freaking blip right because over time btsax always goes up over time over time i think the word always we gotta be careful with historically has always gone up over long periods over a long period of time yes not always every day people yes and uh cat i'm going to apologize at a time because i'm not going to attack your question head on because there's enough people that didn't hear episode 535 that instead of answering the question directly, which was what I did during my rant, I'm going to instead build the foundation, assuming people did not hear that episode.

43:50I think that's a better way to go, Paula. All right. So the first question is, if you haven't heard of VTSAX and Paula with her VTSAX mug and people that built shrines to VTSAX. What does that mean? That is the Vanguard Total Stock Market Index. You can buy it as a mutual fund as ticker VTSAX. So when you go to buy it, VTSAX, bam, you own the Vanguard Total Stock Market Index. If you want to buy it as an exchange traded fund, which is a little bit cheaper, and now for some of you, maybe you can buy it just like you would a mutual fund. I'd recommend if you have your choice to buy VTI or VTSAX to buy VTI ETF.

44:33So VTSAX is a mutual fund. VTI, same thing as an exchange traded fund. More modern approach to the same thing. But why are people so attracted to this? The reason they're attracted to this is a lot of reasons that were really put together in the nicest way possible by a brilliant gentleman named JL Collins. JL Collins has been on this podcast before. JL Collins wrote this wonderful book that I love beginners to read called The Simple Path to Wealth. And the summary, the Joe Salcii summary of this book is this. Everybody freaks out when they invest about what to invest in. Do I have the right investment?

45:12They get FOMO. They might not have the right investment. How am I going to do it? And JL Collins basically during the course of this wonderful book tells the story of, don't worry about it. Take this big worry everybody has and get rid of it, just buy everything. And you know what's cool? If you buy everything, which is the total stock market index, VTI or VTSAX, you're going to get there. You're going to be wealthy. It will happen because all we need to have happen is the economy to continue. If the economy continues, you're buying all the stuff and all of it. So stop worrying about what to buy and just worry about the thing that's important.

45:49And Nick Majuli, when he was on this show, kind of reiterated that. It's important when you start off, forget about robo-advisors, forget about target day funds, forget about Bitcoin, forget about all this stuff. Worry about one thing. How fast can I shovel money in? Nick Majuli is a Stanford-trained data scientist, and his whole slogan is, just keep buying. Because he also, when he was in his 20s, he made that same mistake. He over hyper-focused on what to buy and didn't think enough about how much to buy. And so his message is just keep buying, focus on your contributions. So smart. Especially when you're young.

46:28And if you buy VTSAX, you don't have to worry about that. Now, here's where the problem came, Kat. The problem came when good, well-meaning people took JL Collins' simple path to wealth and thought that meant optimal path to wealth or brilliant path to wealth or best path to wealth. He didn't say any of those things. JL Collins, super smart. He wrote simple on purpose. Another brilliant gentleman who I'm going to reference a lot here is actually good friends with JL Collins. His name is Paul Merriman. I also found, at least in the Facebook group, a lot of people that know JL Collins do not know who Paul Merriman is.

47:09Paul Merriman is where you graduate to when we leave J.L. Collins. He was a guest on the Afford Anything podcast in episode 300. Affordanything.com slash episode 300. He's a wonderful human being. Just he and J.L. Collins both. They've given so much to this community. But Paul has done a ton of research. I don't need to reinvent the wheel. So rather than me reaffirm all Paul's research, I just always reference Paul. But I knew this from my days as a financial planner, Paula, that the most efficient way to grow money is not buying a little bit of everything. So when I heard that people with hundreds of thousands of dollars were still doing this, I thought, are you nuts?

47:55And then I went and began building the research. And then I saw Paul Merriman had already done the research. Then I found out that he and JL Collins talk all the time. And they're not butting heads. they both get it where they exist in the universe. So here's the deal. When you just begin investing and somebody said in the Facebook group, Joe said, when you're young, I didn't mean when you're, if I said, when you're young, I apologize. I did not mean when you're young. I meant when you're a beginning investor. I don't care if you're 20, 30, 40, 50, doesn't matter. When you start off by VTSAX, buy the one thing, focus only on shoveling money in.

48:32Cat asked the direct question. So when do I rotate? When do I start moving away from that? The time to move away from that, again, I've done this research too, but I'll reference Nick Bajuli's research because he put this way more brilliantly than I could, way more succinctly, which is this, when the returns over a given time period matter more than you shoveling money in, that's when you begin focusing on your asset allocation, it's called, your more perfect diversification. So for most people, that's around$80 ,000 to$100 ,000. If you get to$80 ,000, maybe$120 ,000. Invested, you mean. Invested dollars.

49:12Invested into a place like VTSAX, you will find that that swing in a month that the money will do on its own is going to be greater than the amount of money you put in. When that happens, then it's time to get more analytical about your investing. I'm going to start off with the research here, and then I'll go into what I think is best. The good news, Kat, is you talked about researching a bunch of stuff. You don't have to have time to, you don't need any of that. This is the other mind-blowing thing to me, Paul. I think people think that VTSAX is so simple, and the next step is super hard. The next step is super easy.

49:49It is super, it's incredibly easy. It will take more time, maybe about 45 minutes a year. So if you've got 45 minutes to not VTSAX and chill, the difference is going to be huge. Now, before I get to optimal, let me just show you better because Paul Merriman did some research. I've given the link to Paula. She'll put it in the show notes. You're going to love this. Those of you watching on YouTube will also see it on your screen. So first of all, Paul Merriman doesn't evaluate VTSAX. He evaluates S &P 500. S &P 500, people don't know what that is. That's the 500 biggest companies in America. Standard and Poor's turns them into an index to evaluate how large companies are doing in general, how the economy is kind of doing, right?

50:32So you'll hear the Dow Jones Industrial Average went up or down. That's 13 companies. Or you hear the S &P 500 went up or down. That's 500 companies. Paul Merriman looks at the S &P 500. So I went and dug up what's the difference between the S &P 500 and VTSAX over long periods of time. I've given Paula two of many sources I find saying that since the 1920s, and by the way, a great, great YouTube video from Financial Tortoise dives into this. Since the 1920s, he's extrapolated using scientific, using research firms beyond when these indexes actually were created, where these researchers went back to the 1920s to say, had these indexes been there in the 20s, how would it have happened?

51:16Even into the 1920s, VTSAX and the S &P 500 have damn near mirrored each other return wise. You can look at 20, 30, 40, 50, 60, 70, 100 years, and they've mirrored each other. Now, that's not on a daily basis. I would tell you that VTSAX is better than S &P 500 when you're starting out because you're buying more things. You are more diversified. You will see the standard deviation, which is the amount of swinging that the fund does on an average day is going to be a little lower. But when we talk about returns, the point I want to make is Merriman looking at the S &P 500 is exactly the same as Merriman looking at VTSAX.

52:00So Merriman says the S &P 500 can be beaten. Joe Salcihai said that means VTSAX can be beaten. Paul Merriman didn't say that. Paul Merriman, in one piece of research that I'd like to start with, this is not optimal, but he takes 100 % money in the S &P 500. Then he takes nine different types of funds. And little by little, he tears 10 % off of the S &P 500. So he starts off with 100 % S &P 500, zero, anything else, then 90 % S &P 500, and then 10 % something, and then 80%, and then 10 and 10 of two different things. And he slowly makes it where he's got 10 holdings, all 10 % each. Any good financial planner will tell you that's crap asset allocation.

52:42You don't go 10 % this, 10 % that, 10 % this, 10 % that. You can be much, much better. But this is how easy it is to beat VTSAX. He starts off with 100 % in the S &P 500 and he goes from 1970 to 2022, 53 years, Just goes back to 1970. He starts off with$100 ,000. The S &P 500 or VTSAX, 100 % invested in just that fund, grew from$100 ,000 over 53 years, grew to$18 ,900 ,000, just over that. That's a ton of money, Paula. JL Collins is 100 % right. Given 53 years,$100 ,000 adding nothing to it grows to$18 ,900 ,000. you will be okay with VTSAX. That wasn't my point. My point isn't that you're not going to be okay.

53:30My point is then he takes just large company value stocks, which is already, you know, Paula, a piece of the S &P 500, but he over, he over allocates toward that one. So now it's going to be 90 % S &P 500, 10 % large company value stocks. Large cap value? Large cap value. Now, the standard deviation of the S &P 500 during that time for the nerds out there like me starts at 17.2. This reduces it to 17.1. The portfolio gets a little bit less risky, a tiny bit less risky. But instead of 18.9 million, if you just took 10 percent, you focused it large cap, large company value stocks, almost 20.8 million.

54:13You gained almost 1.9 million dollars just by putting 10 percent overvalued into large cap value. Wow. What's interesting to me about that to just cut in here is that the S &P 500 slash VTSAX necessarily are already overweighted towards large cap companies. So it actually surprises me that siphoning off 10 % from that initial allocation and putting it into large cap. To me, that just seems like redundant. Yeah. The same thing in a different outfit. Yeah. And it just says, I want to take this and I want to focus more on big, solid, boring companies. And for people that don't know the difference between value and growth, if Paul and I are investors and Paul is a growth investor, I'm a value investor.

55:01We're both looking at a company, say NVIDIA, right? Paul looks at NVIDIA and goes, is NVIDIA going to take over the world? Well, clearly they already have, right? So that's what growth invest, is NVIDIA going to continue to grow? And that's a question you see every day, by the way, in the financial press right now, is NVIDIA going to continue to grow? Is this magical train of NVIDIA growth going to keep going? Who knows? A value investor looks at, if I sold off NVIDIA for parts, for the name and for the parts, do the parts equal a value? Is it something that's on sale? Clearly, NVIDIA is not on sale.

55:35Right. Value investors are basically looking for discounts. Yes. They want to make money by finding discounted stocks where the market doesn't adequately price in what they assess to be the value of the stock. Whereas growth investors focus on stocks that they believe will continue to grow like bonkers, even if it's not necessarily on sale. Amazon, great, particularly in the 90s and the early 2000s. Fantastic. Right. Amazon in the early 2000s, great example of a growth stock. The financials never look good. Right. And they continue to grow and grow and grow and grow and grow. So Merriman's not done there.

56:14He then says the next step is I'm going to take 10 % and I'm going to move it out of the S &Ps and I'm going to go 80-10-10. I'm going to have 80 % in S &P 500, 10 % really focused on large cap value, large value companies. Then I'm going to take that last 10 % and I'm going to buy small cap blend, meaning I'm going to buy small companies that are either not respected yet by the market, their value or their growth. They might be right in the middle, right? So a small cap blend of value and growth. Instead of$18.9 million, that portfolio grows to$22.3 million. The standard deviation only goes back up.

56:54The risk only goes back up to what it was originally with the S &P 500. So without taking any more risk, we added$3.4 million to the portfolio just by going 80-10-10. Bam. Huge gain. And again, what surprises me about this is that the fact that the S &P 500 slash VTSAX is comprised of primarily large cap funds, but also small cap and mid cap. Yeah. So what we're buying are things that are already represented inside of VTSAX slash S &P 500. But we're getting more technical about exactly which parts of the market we buy, right? So now 80, 10, 10 is better. Still not what I recommend and not where Merriman's finished.

57:40Next, he takes another 10 % and he goes instead of 80, 10, 10, he goes 70, 10, 10, 10 now, 70 S &P 500, 10 large cap value like we did before, 10 small cap blend like we did before. And then 10 small cap value. So he takes part of that small cap blend, Paula. And now he emphasizes 10 % just on the value side of small company stocks. Again, kind of repeating himself. But he's doing this just like a top chef will add a little more pepper. They know exactly what to put in the recipe. Instead of 18.9 million that you had with VTSAX, you now have$27 million. dollars. You grew it by$8 million and the standard deviation instead of 7.2, 17.3.

58:28So you ticked up just slightly more risky. But I would say as a former financial planner, if you were okay with 17.2 % swing, you're going to be okay with 17.3. Things are going to be fine. Next, he added real estate. Now he goes 60 % S &P 500, 10 % to large cap value, small cap blend, small cap value. And then he adds in REITs, real estate investment trust for people that know. So he's adding passive real estate now to the portfolio. The cool thing this does, this calms down the volatility, right? Because Paula, as we were answering the earlier question, real estate cycles are longer. They tend to be more boring.

59:04They take much longer to play out. So your risk on a daily basis becomes less. So we go back down from 17.3 to 17.1. So we take some volatility out of the portfolio, but But instead of 27 million even, we're now at 27.6 million. We've now grown an additional$8.7 million because of that. Then he goes 10 % international. That ticks the risk up, right, to 17.9. But we now grow the portfolio to$35.6 million. And this is an interesting lesson, Paula, because what are people saying now about international? Oh, the last 15 years, international hasn't done anything. Yeah. Right? Yeah, exactly. Why bother?

59:48The best companies are in the United States. We had a whole conversation with Michael Kitsis about this. And when Merriman and Kitsis and everybody else takes a longer view, the pro takes the longer view, they go, don't make the mistake of recency bias. Do not make that mistake. Because instead of 18.9 million, now we have 35.6 million. Certainly the volatility ticks up when you go to international. And then for people that want a little pepper, he puts in emerging markets. Emerging markets means now you're buying international, but you're buying just small companies on the international stage.

1:00:18So 10 % to the S &P 500, 10 % to large cap value, 10 % to small cap blend, 10 % small cap value, 10 % real estate, 10 % international, 10 % emerging markets. Instead of$18.9 million, we grew it to$41.8 million. dollars. Jeez. Wow. A gain of 22.9. And all you had to do, Paula, was keep those 10 % even, right? All you had to do is rebalance 10, 10, 10, keep them the same. That's all you had to do. We more than doubled the returns. 45 minutes a year. Still, you know, this isn't where we're headed. All I'm showing you with this, and Paula will put this on the screen, Paul Merriman's excellent research.

1:01:01All you got to do is get a little more analytical, just a little bit. it isn't hard to beat VTSAX. It's not hard. It's not hard at all. It doesn't take a lot of time. What should you really do though? The real thing you should do is not buy a robo. I don't think you need to buy a robo. You can. A robo will do something like what Merriman's talking about. They'll do it for a fee and we can chat about whether that's worth it or not. Kind of depends. If you work with a pro, they will work with the efficient frontier instead, which I like better. The Efficient Frontier looks at your timeframe and your tax situation of your investments and looks at optimally, how would you, instead of 10, 10, 10, 10, 10, how would you diversify that pie to really reach your goal?

1:01:48Because frankly, it isn't about beating VTSAX. It's about more safely and more easily and more consistently reaching your goal. And the way to do that truly is through Markowitz's research. which Harry Markowitz won the Nobel prize for his work on the efficient frontier and most efficient balancing of investments. But certainly I would think as a starter, Paula, just diving into Paul Merriman, and this is just one piece of research he's done. He's doing this type of research all the time. Just graduate from JL Collins to Paul Merriman and do that when you get to the point that your investment strategy means more than the money you're shoveling in.

1:02:27at that point, then I think start digging into Merriman and that's when you're going to get better at investing. Kat, and to the part of your question in which you said that you were under the impression that I, Paula, advocate a set it and forget it approach and that I am not a fan of financial advisors, I would not say that at all. I like the idea of working with a financial advisor, if, if, and this is my big if, if you think they are both a wise and brilliant person, right? They need to be both intelligent and wise. They're not the same thing. Just because somebody has a given credential does not necessarily mean that they have good judgment.

1:03:12So yes, at a minimum, make sure that they are properly credentialed, make sure that they have a fiduciary duty to you, make sure that they are fee only. So I absolutely, as a floor, as a bare minimum, advocate for working with a fee only fiduciary. But, and this is the huge asterisk here, just because somebody has checked the right boxes does not necessarily mean that they have good advice. You remember when we were all in elementary school and there were those kids in the classroom that were just kind of like, eh. You don't want that kid to grow up and become your financial advisor. And so even if that kid has assembled the right credentials, you still don't want that kid.

1:03:59I also, Kat, am less excited about working with a financial advisor than you think. I am much more about surrounding yourself with smart people and making sure that you have smart people that are talking to you so that you have that positive growth mentality that you need. And when you're stepping in it, you have people that have the guts to tell you that you're stepping in it and to really help you get where you want to go. In fact, Paula, you and I were talking about a guy that I think is brilliant. I don't even know if he has any credentials, but I said that guy would be my financial advisor.

1:04:33I don't know what his credentials are. I don't even care how I would pay him. I just want to talk to him more often. That's a guy that I want to talk to. The people that we referenced today, JL Collins, Paul Merriman, Nick Majuli, those are people I want to talk to more often. I want to fill my ears with people whose opinions I respect that I truly would take advice from in a heartbeat. They have the gravitas. They have the experience. They have the background that I know that not taking advice from them would be a mistake. In fact, Paula, the reason why you and I ended up with Westwood One, both of us, is because of one of those people.

1:05:11And this has nothing to do with financial planning. This just has to do with, I told you when I went to Westwood One, aka Cumulus, that there was a guy here who was amazing, who was incredible. And then you talked to him and I think you think he's incredible too. Just an incredible guy. We're talking about John Wardock and just a great guy. If John gives me advice and I don't take it, I'm an idiot. That's who I want is my financial advisors. That's who I had as a podcast mentor was this guy because he's a guy that not only did I know that he had my back, he knew what the hell he was talking about.

1:05:48So the takeaway then is in all elements of life, surround yourself with brilliant thinkers. Absolutely. It is less about financial advisors though. So I'm not as concerned about just financial as overall. Well, Kat, I hope that answers your question. A set it and forget it approach, as far as I am concerned, is behaviorally make sense for people who don't want to think about it or people who get easily overwhelmed. And it's also a good approach for somebody who is just getting started, someone with less than$100 ,000 in assets, in investable assets. Beyond that, getting a little bit more sophisticated.

1:06:29And again, that can come from running projections online, using some of the more robust tools and calculators that are out there. There's a wide variety of them. So if you're going to go that route, use a few so that you can test the results of one against the other. That's an approach that you can take. And working with a brilliant and wise person who does not have an assets under management model, an AUM model, that's another approach that you can take. In fact, even regardless of whether or not you do work with someone, you should be running those projections on your own just so you can model out your own ideas to bring to the meeting and see whether or not their ideas mirror what you found and if not, why.

1:07:13So thank you for the question, Kat. And thank you, Joe, for the brilliant discussion. It was fun. This is a fun topic. And as you can tell, one near and dear to my heart. Well, Joe, we've done it again. Again. We have. Where can people find you if they would like to hear more of your ideas? More scintillating. Yes. Scintillating commentary on VTSAX. I've got two great things, not about VTSAX, but with all the vitriol and all of the, oh my goodness, my social media feeds overwhelmed with political junk. If you want to talk about presidents, but not about this election, I did a great interview with Meg Gorman.

1:07:54Meg dives into the details of how different presidents manage their own money, Paula, and about how Calvin Coolidge was a guy who didn't even own a house when he was vice president. Like he was so, so overly conservative. Or Ulysses S. Grant, who accidentally entered a Ponzi scheme. Or FDR, who always liked doing these venture capital things, these, you know, rolling the dice and getting the big money and often losing. So if you want to hear the stories of how presidents are much more like you and me and lessons we can learn from past presidents, listen to us with Meg Gorman. And then, of course, a guy who you've seen all over financial talk shows, if you're into that type of thing, Josh Brown, who is actually Nick Majuli's boss, is joining us on the show to talk about kind of under the financial planner hood, like all the stuff that you probably need to know about investing that the Wall Street people don't tell you.

1:08:53And I generally hate that term, but Josh knows all the dirt and it's a super fun conversation as always with Josh Brown. Awesome. So all of that is available on the Stacking Benjamins podcast. Wherever finer podcasts are distributed. Nice. Well, thank you so much for tuning in. If you enjoyed today's episode, please do three things. First, sign up for our newsletter, affordanything.com slash newsletter. Second, make sure that you're following this podcast on Apple Podcasts, on Spotify, and in any other favorite podcast playing app. Also, make sure that you are subscribed to us on YouTube and hit the bell for notifications.

1:09:32Leave a comment on YouTube as well. Like, comment, let us know what you thought. And of course, most importantly, share this with a friend, a family member, a colleague, a neighbor. Share this with the people in your life. That's the single most important thing you can do to spread the message of great financial health. Thank you again for tuning in. I'm Paula Pant. I'm Joe Salcihai. And I'll meet you in the next episode. Thank you.