#124 Wealth Expert: Do THIS Every Time You Get Paid | Morgan Housel

21:24And so a lot of people are like, once my net worth is a million dollars, I'll be great. And then you get there and you're like, well, I feel the same. So maybe it's$2 million. And you get there and you're like, I feel the same. Maybe it's$10 million. And you're just constantly chasing the high that you think you're going to get from it. Money can solve a lot of problems in your life, but this is another area that we just overestimate what it can do for you. How many discounts does USAA Auto Insurance offer? Too many to say here. Multi-vehicle discount, safe driver discount, new vehicle discount, storage discount, legacy.

21:51How many discounts will you stack up? Tap the banner or visit usaa.com slash auto discounts. Restrictions apply. Spring is here, and there's a whole new way to chai at Starbucks that's made perfect for you. Choose your sweetness, dial it up, or keep things light. Add a touch of pistachio, a hint of strawberry, or vanilla, or make it a spring classic with lavender. Because this season, there's endless ways to chai at Starbucks. What is the research that you've done showed is the amount of money for which we do derive a lot of happiness? Like how much for somebody listening, how much you're like, you know what?

22:30You really don't feel bad for going up until this amount of money. I think it's so different for person to person and geography to geography. But certainly at the lower levels, the more money you earn, the more that you can massively increase your happiness. If your income goes from$10 ,000 a year to$20 ,000 a year, you change your life completely. And going from$50 ,000 to$100 ,000 can change your life. Probably going from$100 ,000 to$200 ,000 can change your life. Different for everybody based off of their ambitions. But I think for a lot of people, once you own a house that has enough bedrooms for you and your kids, and you like the neighborhood that you live in, and you have good neighbors that you enjoy, and your car isn't breaking down, and you're eating healthy food, and you're doing like checking some pretty basic boxes.

23:12You have adequate health care, those things like that. And most barriers in life, you might be able to get that for different region to region, but 200, 250, whatever it might be. Then after that, it's not that the money can't make you happier, but it diminishes quite quickly from there. And at the extreme levels, is there any difference in lifestyle between Elon Musk, who's worth, I think,$600 billion, and Jeff Bezos, who's worth$200 billion? Of course not. $400 billion difference. There's no difference in lifestyle whatsoever. For most people, there would be no difference in lifestyle between 100 million and 100 billion.

23:46You know, you have too many houses, you have planes, you have everything you could want. It just diminishes quickly from there. A more important point, though, is I think for a lot of people, there is a net worth at which not only do you stop getting happier, but your life gets more complicated. And you start dealing with like big existential questions of who am I and what do I do with this? And it becomes a social liability. There's a level at which your friends and your family are going to start come asking you for money. You have such higher expectations of like, how do I raise kids without spoiling them and whatnot?

24:18There's all those questions. And that level of net worth is probably lower than people think. I remember when I didn't have much money at all. I would listen to something like this and be like, yeah, I'm going to try it. I was like, great. I don't know. I'm going to try it. We'll see what happens. And when I get there, if I'm still unhappy, fine. So be it. But I think the other thing to push back on here, and I feel this strongly, is like, you have to look, like, what does Munger always say? Incentives always incentives. And, you know, the incentive in the world today is to make you consume more, spend more, keep up with other people.

24:50Like, that is just how our economic. In a competitive world. Yeah. Yeah. And our society works. And so you have to, like, push back slightly on that and go, at what point is this all just memetic desire where I'm chasing somebody else's dream, somebody else's hope, and I'm stuck in a rat race that I didn't even want to enter in the first place. And I think you have a lot of reasons why we do that. And I love some of the quotes you have, like spending money to show people how much money you have is the fastest way to have less. And so even for the person that's listening out there, it's not like, oh, don't worry, stay poor.

25:27We don't care. It's really psychologically, if you don't rewire your brain, you actually never will get wealthy. And then simultaneously, you will have a counterproductive result, right? I think people should have a lot of ambition to have more money for independence. I think that should be the ultimate goal. It's not that money won't do anything for you and you should stop chasing it and enjoy being poor. It's not that in the slightest. You should want more and I want more for that reason. I just want to be completely independent. And everybody is talented in their own way can be happy in their own way if they have independence.

26:01And it's actually very difficult to express that talent and to express who you are if you are completely beholden to somebody else's goals, metrics, incentives, which most people are. And so that's what I think the ambition should be. It's not ambition necessarily for a greater material life or greater social status.

26:20Morgan Housel:It's ambition for independence. So how do you tell if you're spending to show other people you're cool versus you're spending to get independence? This is like an imperfect way to think about it. But I think about a lot about this in my own life, which is just asking if I was on a deserted island and nobody could see how I lived, nobody could see a single possession that I have, would I still want this thing? And a lot of people in that mental exercise would say, in that world, I wouldn't change anything. I'd have the same cars and the same house and the same clothes and they're great. And that's what I think a lot of people would answer that.

26:53But I think we would see. Do you think a lot of people would say that? I think for the most part. Like, doesn't the average American have like 20 pairs of shoes? That wouldn't make sense. Well, I think there is a lot of spending in the world that is purely social status. Yeah. It's just purely that. And so in that mental exercise, you understand the difference between utility and status. Between like, what am I doing just to impress other people? And what is actually making my life better? And you can spend a lot of money to make your life better. It's not to say like on that desert island, I would have an awesome house.

27:25I would have very comfortable clothes and I wouldn't want to dress, feel like a slob. I want to feel good about myself. So maybe it wouldn't be that much different. And but you start thinking about things differently. If nobody was watching, how would I live? Because the truth is almost nobody is watching. Like that's the truth for most people. So in that situation, you go to, you just brought up Charlie Munger. And I just read this article about him about a month ago that was describing his last week of life. or his last year of life, I should say. And I might be getting a few of these details slightly wrong, but he built an incredible house in Santa Barbara overlooking the ocean, amazing house that a multi-billionaire would own.

28:03And then he had his house in Pasadena that he had lived in for like 60 years. And by every account, it was not just a middle-class house. It was like, dare I say, a dump. But he had lived there for 60 years. And in his last couple months of life, that's where he wanted to be. That's where he wanted to be. Not in the palace overlooking the ocean, the house that felt like home to him, that had the memories that he had, that was probably, I assume, surrounded by neighbors who he enjoyed and friends nearby and whatnot. And I think that model explains a lot of things in life of like, what you want out of this material possession is not just the price or the square footage or like the things that you can measure like that.

28:41So much of it is just like, well, do you actually enjoy it? It's the intangible things of what you enjoy them for. You know, it's so interesting because you have a quote that I really liked, which is somebody saying, quotes, renting is throwing your money away is the kind of thing said by a guy who has never had to replace the roof on a house he owns. I wrote that tweet in anger after replacing the roof on our house. I felt that from you. I'm curious, do you think it's better to own or rent a house? I can tell you my experience. My wife and I rented for a decade or more. And it was the greatest thing in the world.

29:15We lived in like five different cities and we could just pick up and go. And that flexibility at that phase of our life was unbelievable. And I was very pro-renting. I don't believe houses are great investments, financial investments. That's always my view. About a week after our first child was born, I felt this overwhelming sense that like, I want to buy my own house and I want to do it right now. The idea of like, I don't want to be a transient renter. I want a firm, solid home base for my family. That feeling was so strong. So we went out and bought and it's been great. The important thing though is like you should buy when you can afford it and when you think you're going to settle down.

29:53And the idea of like people doing these calculations of like, oh, well, actually if I bought, I would save$100 a month versus if I rent. This is not a spreadsheet endeavor. Like you should do it when you can afford it. But so much of it is just the value and stability that you want for you and your family. I think we did a lot of harm in society

30:08Morgan Housel:when we taught people that A, rising home prices are a good thing. That did a lot of damage to people. It's a terrible thing. And B, that in the decision of whether you should buy or rent is a spreadsheet decision versus just the quality of life and the kind of life that you want for you and your family. Those two, I think, things inadvertently did a lot of damage to society. I think you're right. I mean, because when you look at the math, it's actually quite hard to argue that homeownership is better than renting? If it's just looking for math. If all you're looking for is the financial outcome.

30:44I would not be surprised. In fact, I think it's almost certain that I've been a homeowner for 10 years that if I had rented the whole time, my net worth would be higher. I think that's probably right. Well, of course. And not a single cell in my body, if I had a time machine, would do it differently. Yeah, that's a good point.

31:00Morgan Housel:I'm like, I'm not doing this to maximize my net worth. I'm doing it so I have a stable place for my children. That's it. And we can live in the school district that we want to. And I think the sense of ownership that comes with owning your house is a really good, fulfilling thing. If you're in the phase of your life where you're ready for that. I want to talk about something else that I think maybe is a detriment to society and that people have categorized wrong, at least I think, but I'd be curious your take. Let's talk about passive income. Is it real? Can you get it? Is this reasonable for people to want?

31:32I think it rarely, if ever, exists because what people think of passive income is, I don't have to work to get this. And anyone who's been a landlord realizes that could be a full-time

31:46Morgan Housel:job for doing it or owning small businesses. The idea like, oh, you just buy them and collect the checks tends not to be the case. You understand this better than anybody. If you're investing in the stock market, the psychological price you can pay for the uncertainty and the volatility or investing in somebody else's private equity fund. And the psychological price tag that you pay of like dealing with that person, trusting that person, lack of trust with that person, the returns aren't coming in like you thought, you don't know when the returns are gonna come in, that's a cost. And it's a different cost than driving to work and working nine to five in a cubicle.

32:18Morgan Housel:It's a different cost, but let's not pretend that it's not a cost, that you just give money to people and then the money just starts flowing back and you don't have to do anything for it. It's easy to underestimate the price tag of those things. Yeah, that's very true. Even if you're just talking about the K1s and the tax complications. Most of it in public stocks, it's the volatility and the uncertainty. And once or twice a decade, that will be harrowing. You will not be able to sleep as the stock market's falling 50%. And you don't know if this is a run-of-the-mill correction or the second Great Depression.

32:47Morgan Housel:And you'll deal with that twice a decade. How do you protect your mind and your psychology for those horrible financial life events like that? I save a lot of money. Am I saving for a new house? No. Am I saving for retirement? Not necessarily. I'm saving for a world in which things are going to happen in the broader world and in my life personally that I can't foresee, that I am not thinking about today and will have a major impact on my life. And so that's the psychology of it. I think a lot of financial advisors might look at my net worth allocation and say, like, what are you preparing for?

33:24Morgan Housel:It's not that conservative, but probably more cash than people would generally recommend. And I think a lot of it is just being an amateur student of history. All history is a constant chain of surprises that nobody saw coming that fundamentally shaped the world, usually in bad ways. And the people who do okay over time are the people who have a conservative enough financial arrangement and mental flexibility to endure those episodes. What are the habits of rich people versus poor people you've found? in all your research? Well, there's obviously a lot of survivorship bias in rich people. So, you can look at someone who's very wealthy and be like, well, look what they did.

34:05They started this business and they took a huge risk and they didn't do this. And like,

34:08Morgan Housel:here's their morning routine and all that. And for every one of those things, there are a thousand other people who did something very similarly and failed. And also that I think there's a Paul Graham quote where he says half of the attributes of very successful people are actually liabilities to them. And so, we can look at an entrepreneur and be like, oh, he wakes up at 3 in the morning and runs 20 miles. Yeah, but that's not why he's successful. He's a crazy person in general and he has all these other crazy attributes. There's no cause and effect in that. But I think if you wanted to create a common denominator of it, it's a combination of obsession and long-term thinking.

34:48Morgan Housel:It's a combination of like, these people don't obviously work nine to fives. They wake up thinking about their business. They go to bed thinking about their business. When they're playing baseball with their kids, they're thinking about work. It's the only thing that they can think about. And they don't want to do it for two years and sell their business. They want to do it for 50 years. They want to do it for 70 years. All wealth comes from compounding. And when most people think about compounding, they're like, well, how can I earn the highest returns? What is appealing is how can I earn the highest returns for the shortest period of time?

35:19Morgan Housel:And where most wealth actually comes from is like, how can I earn merely good returns for a very long period of time? That's where it tends to come from. So if you find someone who's very good at their job or very wealthy, the common denominator of those people tends to be they've been doing the same thing for 30 years or whatever it might be. And if anyone does the same thing every day for 30 years, of course, you're going to get good at it. It's so true. You have another quote I love, which is that everything that ends up working in finance stems from patience and self-control. Everything that doesn't work stems from instant gratification and FOMO.

35:54Morgan Housel:I've done a lot of work with young students, high school students. And two things stick out. One is I think relative to previous generations, they're smarter because they have more information than we did. They're just constantly drinking from a firehose of information. So they know things about the world that we didn't when we were 17. And the other thing is every single group among these very intelligent kids, everybody will ask me some version of the question, what penny stock should I buy to double my money this week? And I have to remind myself that like these kids aren't dumb. They're very smart.

36:28Morgan Housel:But the knee-jerk reaction, what seems like common sense to everybody is how can I get rich the fastest? It's just what's the fastest way to get there? And that's the cause of every financial failure is usually like trying to take something that naturally should take 10 or 20 or 30 years and being like, well, great, but I don't have the patience for that. How can I compress it as fast as I possibly can? And I think that's what it comes from. And the idea of being patient is not intelligence. It's not education. That's purely just behavioral. There's some people who have no education that can be the most patient people in the world and people who are extremely intelligent who have the attention span of a fly.

37:11Morgan Housel:They can't keep it going. And I think it tends to be in finance that sometimes the smartest people are the most impatient. And because they want to use their intelligence and their IQ to be like, well, how can I speed this process up and get it as fast as I can? And that's the source of every blow up. That's fascinating. It does feel like, I mean, I go back to like the Buffett quote of, you know, why do you tell people all of your secrets and he's like, because nobody else wants to get rich slowly. They're not going to do it. Right. Yeah. Which is so true. It's like, Morgan, why would you write a book on how to make a bunch of money and keep it?

37:42Because probably most people who read it aren't even going to do anything. I think about my parents. They have no financial education, moderate financial knowledge that was like self-taught just from just like very modest interest in it.

37:57Morgan Housel:And so they are not the persona of like financial sophistication, but they did one thing, which is they dollar cost average into index funds and they haven't sold anything for 40 years ever. And if you compared their returns to professional fund managers, they're literally not, it's beyond top 1%. It's probably top 0.1 % at this point that they've outperformed for doing nothing and for knowing nothing. Because all they had was all that you actually needed was just like a profound sense of patience and leaving it alone. Do you think that most people should just put money into a diversified investment portfolio, leave it there?

38:32cost average and that's it.

38:33Morgan Housel:I'm not a passive investing zealot, the person who's like, nobody can beat the market, don't even try. Of course, some people can beat the market. People have beat the market and they'll continue doing that. And some people have done that profoundly well. But it's like asking, should most people try to get in the MBA? No. Some people can do it. Let's not pretend that I can do it. And there were that anyone else. Of course, it's hard. So, whenever people bring up the statistics of 99 % of mutual funds will underperform their benchmark. They use that as an indication of like, see, the industry is a scam.

39:07Morgan Housel:My response has always been like, no, of course, that's how it works. What world do you expect to live in and where everybody who tries to beat the market and make a fortune can do it? Like, of course, that's never going to exist. Just like everybody who wants to join the NBA is not going to be able to. And I don't know what the statistics are of like, what percentage of high school basketball players make the NBA? I don't know. It's probably 0.00001, like whatever it is. And people are like, yeah, that's how it should work. And it's the exact same in investing. So your question is like, should most people dollar cost average and index?

39:38Morgan Housel:Yes. Does that mean it's impossible to beat the market? No. And also humans, we are the, like you talked about optimism bias, but we are such funny little creatures in that we will try to go beat the market. I mean, I talked to a lot of young people today too, and that's always what they want to know is, you know, how do I buy a business for$0 in 30 days that makes me millions? That's an absentee owner that I don't need to work at. I'm like, the second you figure that out, fill me in. Let me know. I'll be right there with you. I think a lot of it is because the barriers to entry of investing in the stock market are zero.

40:11Morgan Housel:And any 17-year-old can open up a Robin Hood account and transfer$20 into it and start trading the same stocks that Citadel is trading at the same time. And there's not a lot of other things in life that are like that. If you said to a 17-year-old, like, hey, do you think you can go build the Golden Gate Bridge? No, of course, it's impossible. But you can open up a Robinhood account and start pretending that you're the next George Soros. So because the barriers to entry are so low, it gives everyone the shot of like, maybe this is my ticket. Let me convince myself that I can do it. It's so true.

40:44And you get this. I mean, I remember back in the day, I had a chance to invest in Robinhood when it was like super, super early on. And I'm an idiot and I didn't. But the reason why I didn't, I actually kind of stand by, which is that I really don't think you you should gamify stock market investing. I remember when I saw the pitch in the background, I just thought, I don't think this is going to be good for society.

41:04Morgan Housel:I think most people who work at Robinhood and work at Kalshi and Polymarket are good people who want to do the right things. This is not a complete moral indictment on them. But no, I don't think we'll look back at those kind of tools as having helped a generation of people. I think if you compare Robinhood to Vanguard, Vanguard is an index fund company, super low cost, long-term, that I think you could look back at something and say like that did a lot of good for people. But something that gamifies it is really important. There's a great interview with Jon Stewart when he was on The Daily Show.

41:38He interviewed Jim Cramer. And this was in 2008,

41:41Morgan Housel:kind of the teeth of the financial crisis when the market imploded. And Jim Cramer went on the show and Jon Stewart's bringing up example after example in a mockery fashion of like what CNBC was. And Jon Stewart had a quote that I loved. He was like, I know you want to be entertaining, but this is not a game. This is people's retirement. This is people's life savings. This is not the casino. This is not entertainment. It should not be entertainment. It's a very serious thing. And you can see how like if we gamified health, people would be like, no, no, no. It's like this is not a game. But you don't want to do that, especially if the risk of losing is cancer or something like that.

42:18People are like, that's not a game. Don't do it. But we do that with money. And we do it to the most vulnerable segment of the population, which are young kids, particularly young boys whose prefrontal cortex won't fully develop for another 10 years as they're day trading these things. When you want your spring break to feel like. And your kids pool day to feel like. And your hotel bed to feel like. Oh, and room service to feel like. Because at Hilton, hospitality feels like. Your cabana's ready. Would you like fresh towels? It matters where you stay. Book now at Hilton.com. Hilton, for this day.

43:02This episode is brought to you by Indeed. Stop waiting around for the perfect candidate. Instead, use Indeed Sponsored Jobs to find the right people with the right skills fast. It's a simple way to make sure your listing is the first candidate C. According to Indeed data, sponsored jobs have four times more applicants than non-sponsored jobs. So go build your dream team today with Indeed. Get a$75 sponsored job credit at Indeed.com slash podcast. Terms and conditions apply. I never thought about it that way, but you're exactly right. My first job was at Vanguard out of college. And what I remember is like going to the cafeteria in Pennsylvania, Valley Forge, Pennsylvania, where the headquarters is.

43:44and walking in the cafeteria. And that was when Bogle was still alive, the founder. And he would just sit at the cafeteria table every day. And you could go up to him. He was an old gent and he would get his little things. And he was like the opposite of what you think about as a flashy billionaire these days. He kind of famously, I think like Buffett drove a Buick. I can't remember exactly what it was, but it was some old car. But what I really respected out of him is that he kind of believed, he drank his own Kool-Aid. He like really believed what he was doing there. And they actually, I remember at the time they had this, like, they actually had an intellectual patent, like, on their shareholder structure, where this is, like, slightly technical, but, like, it's kind of interesting, where they're one of the only, like, mutual holding companies in the finance space, you know?

44:28And I remember, I know one of the guys that was the one who came up with this model. And so it basically mandated, just like an insurance company, that you'd put all the earnings back into the funds to lower the cost. People don't understand this. Most people don't understand this about Vanguard. Vanguard is effectively a nonprofit. And the reason Bogle didn't look like a flashy billionaire is because he wasn't. He did this incredible thing when he started it. He took an entrepreneurial

44:50Morgan Housel:risk and an entrepreneurial effort and built effectively a nonprofit that he was never going to get rich off of. And Vanguard pays dividends, so to speak, in the forms of lower fees to average ordinary people saving for retirement. And so, you look at that, that's a public benefit. That's something that you look back, you're like, that benefited society. The ability for 17-year olds to wager their life savings on a football game is not. It's not. I totally agree. So I think, so I mean, is there a good way, like how do you learn investing without just learning gambling in the public markets? It's harder today than it was 10 or 20 years ago because so much of the material and the tools for young people investing are strictly around gambling.

45:34Morgan Housel:And so it's harder to do. I think in a lot of endeavors in life, if you start off not necessarily by trying it, not necessarily by like, oh, open an account and start trading. Start out by reading as many books as you can and not books that teach you how to invest. I would read books about the history of the economy. And like that could be boring and dry for some people. But you learn very quickly about how people's susceptibility to greed and fear and regret and copying other people and that kind of... If you can understand the basic tenets of those kind of things, you can learn so much about how you should invest and the forces of investment of greed and fear and long-term thinking and short-termism.

46:17Morgan Housel:If you can wrap your head around those concepts, you've learned 90 % of what you need to know about investing before you've bought a single stock. What are your favorite books on investing, if you had to pick? I think the most interesting period in U.S. history was the 1930s and 1940s, Great Depression, World War II. And less about the specifics of what happened, about the military battles. It's just that there was a wider range of emotions in that 15-year period than I think has ever existed, at least in periods that we've documented very well. So you read about that period of the uncertainty that people went through, of the fear, the torment and the trauma, the happiness and elation when it was all over.

46:59Morgan Housel:The range of emotions during that period, I think, is just astounding. And so there's a trilogy of books written by a guy named Frederick Lewis Allen. He wrote his three books. One's on the 1920s, so a little bit before. One's on the 1930s. And then his last one is on how America changed from 1900 to 1950. And that's been kind of one of my three favorite history books. And Frederick Lewis Allen was not, he was not writing about the big characters of the day. He's not writing about Churchill and FDR. He's writing about a farmer in Iowa. Like what was his life like? And how did his life change when the car and the airplane and the radio came about?

47:37Morgan Housel:What was life like that? What were his fears during the Great Depression? What were his, like it goes into detail about ordinary people doing ordinary things. in a way that I think is really fascinating. This is why I think people should read more history and fewer forecasts. Like everything that we deal with today, it's a different cast of characters, but it's the same movie over and over again of dealing with uncertainty and risk and regret. And so if you read a lot of history, even about periods that you think have no analogy to today, like the 1920s or the 1820s, it's the same emotions that people are dealing with today.

48:10Morgan Housel:And that gives you a totally different perspective of what we're going through today. When you're like, you think it's unprecedented what we're dealing with, whatever it might be, AI, Trump, whatever it might be, you think it's unprecedented, it's totally not. People have dealt with this same thing in different forms for all of history. Yeah, I'm reading one right now called Softwar by Larry Ellison. Well, on Larry Ellison. It's a great title, by the way. I know, isn't that so good? Softwar, I just got it. Yeah, right? That's good. That's good. But the interesting part is that it is all this repetition.

48:38So he was building software software companies and kind of in some ways you could say the initial AI companies back in the 90s. And you can see the rhythms to today. And so it's a really fascinating book if you're into building things. Have you ever made a really reckless money decision, but it actually paid off? I wouldn't say it was necessarily reckless, but we bought a house, I don't know, eight years ago or so. And we came up with a budget and here's our budget for the house.

49:06Morgan Housel:And then we're house shopping. And of course, I think a lot of people have this experience. Oh, we found this one and it's way out of budget, but like, look at that thing. Like, that's fantastic. And it gave me a lot of sleepless nights, the decision to buy it. I'm really going to do this. But we knew our life would be better. It was a better house in a better neighborhood with better schools. And I could check all those boxes. And since I had set an arbitrary limit of what our budget was, it felt reckless. It really did feel reckless. And I should say this was during a period when my career and the economy were not going that well.

49:38And so it was like, this feels wrong, but we did it. And looking back at that, it was like, I'm so, so glad that we did that. So glad that we did it. To me, that's always been a thing of like, of course, you can use money as a tool to live a better life. Too many people get caught up in the frugality movement of like, the best way to do everything is as cheap as you possibly can. Like, have a lot of material things that are fantastic that you will have no regrets of later. So that was an area where I'm like, I'm so glad, even though it may not have been reckless, we could still afford it, but I'm so glad that I exited my comfort zone in that area.

50:17And I think a lot of people's comfort zones are self-imposed. And sometimes you have to be like, look, for this thing that means everything to me, I want to go outside of it. Do you ever buy anything really ridiculous? Are you ever like, oh shit, I bought that diamond encrusted Rolex. No. I mean, it's all, it's all relative, I guess. We have a cool house. My wife is really into gardening and landscaping and the amount that she spent on like rocks and trees. Surprisingly expensive. Surprisingly expensive. That is a, yeah. We travel well, my kids travel well. So everyone's got their little thing.

50:50Yeah. We go out to dinner a lot. But there's not like a Morgan house like if the internet only knew. I spend a lot on ski equipment. I grew up skiing. Oh, that is amazing. And that's my thing right now. I don't know if it's moving the needle that much, but if they make a better version, even if it doesn't improve anything at all, I'm like, give me, give me. Are you one of those people that knows the names of all the fancy ski towns in Europe? Oh, yeah. Yeah. That is not me. I wish I, when we were talking about that with, I think it was Vivian too, who I really liked too. But she was like, you know what I realized?

51:21That even though I had gone to the fancy schools and I was making money on Wall Street and whatever, she realized that rich people speak a different language because they were like, oh, we're going to Bimini and then we're going to, and she was like, what are we, where's this? What's happening? If you know what Shamini means, I can guess your net wealth, your new net worth. What do you think it is? What do you have to be at least? If you're skiing at Shamini, 10 million. Yeah. Wow. Yeah. So if you're single looking for a rich dude. Shamini. Shamini. Okay. Not that I would really pick up men that way.

51:52I don't have any experience with that. I married a sailor. Okay, rapid fire. So I'm going to read some common money cliches. I want you to tell me true or false. And you can give me a short explanation for ones that you feel like it. Talking about money is tacky. Can be if you're bragging and flexing with other people, but we should talk about it more because everyone's dealing with the same problems. Talking to your friends, parents, spouse, essential. Yeah, good idea. Follow your passion and the money will come.

52:19Morgan Housel:I will mimic Scott Galloway when I said the people who say that made all their money in iron ore smelting. And now they say it. Buying a house is always a smart move. No. Renting is throwing money away. No, it can be fantastic at that phase of your life. All debt is bad debt. I think all debt can be bad debt. You can blow yourself up with any form of debt doing it wrong. Credit cards are dangerous. Credit cards are alcohol. You can use them and have a great time and a great night. You can easily abuse them and a lot of people do. That's a good line. Diversification is always safer. I think that's right.

52:57Because if you're saying that safer, no, if you're diversified, you're

53:02Morgan Housel:not going to be the richest person in the world. That's always the case. But I think the vast majority of people don't want to. They don't want to outperform. They just want a comfortable retirement without putting too much effort into it. You can't beat the market. You can't be in the NBA. That's so true. Max your 401k no matter what. Some nuance here, particularly for young people who might stay at a company for two years, your company probably has a vesting schedule on the match. So a lot of people are like, it's free money, get the match. It's true if you vest into it. If you're going to leave a company after a year or two, and a lot of young people do, you're going to lose all that anyways.

53:39Explain to them what vesting is if somebody listening doesn't.

53:41Morgan Housel:Vesting is if somebody gives you money, it can be stock options, it can be a match in your 401k, I give you a dollar, but you don't actually get access to it at some point in the future. So I give you, here's a dollar, but you actually get 25 cents a year from now and another 25 cents a year after that. And in four years, you can have all of it. And so that's what a lot of times the match on 401ks is. Yeah. It's a really good point. I also think people don't understand enough about stock options when they take jobs. Our mutual friend, Brent B. Shore had this quote where he was like, yeah, I talked to a guy and he said, I joined a tech startup and I'm making$500 ,000 a year.

54:17And Brent said, how much of that is options? And he said, well, it's$400 ,000 in options. I make$100 ,000 salary and$400 ,000 in options. And Brent goes,

54:23Morgan Housel:what's the strike price on the options? He goes, I don't know. What's the vesting schedule? I don't know. Is there a preferred stack? I don't know. And Brent goes, you make$100 ,000 a year. You're like, there's so many things in between there that such a big gap between the headline number and what you could actually get afterwards to make those things very different. Yeah, you can't eat equity. I think it's like the big actual falsity of our generation is that so many people, I mean, I read a study the other day that said somewhere between 70 and 90 % of stock options end up worthless. Are worthless, yeah.

54:54And so if you didn't actually optimize for some degree of salary, and I really do believe in upside, like take a little money off the table, sure. But all of it, oof. Okay, two more. Stop buying avocado toast and you'll be rich. No, enjoy. It's delicious.

55:08Morgan Housel:The only thing that moves the needle in most people's lives is school, house, car, child care, health insurance. It's the only thing that moves the needle. Everything else, you're just spitting around the edges. So enjoy your toast. Sponsored by the avocado industry. Save 20 % and you'll be fine. Save 20 % and you'll be ahead of most people and better off than you otherwise would be. But you can still and will have challenges every day in your life. Money won't solve all your problems. So Morgan Housel on all the socials, which one's your favorite? Twitter or Instagram? Pretty much the only thing I spend time on is X on Twitter.

55:40I have Instagram, but I don't use it that much. I don't know why. So on both, I really like your stuff on X. And then the book, obviously, Psychology of Money, I feel like if you haven't read that, oh my God, you better get there. But I think your new book, The Art of Spending, it's not even a 2.0. I almost might even start with that in some ways before Psychology of Money. I feel like you could read either of those book interchangeably. Part of the reason I wrote it is because a lot of psychology money is about building wealth and investing, which is important, but not everyone is going to get to that point.

56:13But spending money impacts everybody from every income level, every generation, how you spend, what you spend, what you aspire to spend on that impacts everybody. Yeah. And the other thing about the book that I really like, that sounds like a god awful boring book and it's not. Thank you. Like you're so good at the stories and here's some specific takeaways without it feeling like I'm getting lectured to or there's a 372-step process. Or there's a formula or something like that. It's like, no, this is just - You got me here when you said that. I was like, fuck, it's true. No, but that's what most finance books are, is a formula and a lecture.

56:44This is just, let me tell you some stories that I think you'll like about risk and greed and fear. And they'll stick with you. And then you might actually just change your life and save more money. I hope so. Morgan Housel, I've just adored your books over the years. Thank you so much for writing them. Thank you for being here. Thank you for talking about money So often, you know, all of us, once we make it, we don't talk about it anymore because it seems kind of gross in some ways. So I really appreciate you sharing all your wisdom today.

57:07Morgan Housel:I appreciate everything you've done. Thanks for having me.