Zero-Based Everything: FI, Travel, and the Art of Starting Fresh | Katie & Alan Donegan | Ep 559

31:37So had they invested that money in low cost index funds or ETFs at an 8 % annual return, we would expect that amount to double every nine years, right? So 18 years from now, that 200 ,000 sitting and checking out will still be$200 ,000, right? If it's earning 0 % interest, if it was invested in a market earning 8 % annually, it will double every nine years. So it'll be 400 grand after nine years, and then 800 grand after 18 years. So that's 800 ,000 versus 200 ,000. So So while along those 18 years, there will be volatility, obviously. We know the stock market goes up and down and sometimes up and down significantly, intra-year or an entire year, but which is truly riskier?

32:21I think the answer is obvious when you look at it of, hey, there's no volatility in keeping your checking account, but I would argue that's dramatically riskier. I think just to strengthen your argument as well, Brad, even if it was in a savings account that was earning a small amount of interest, you're still going to be significantly worse off. Because I think a lot of people would say, well, it's not in my checking account. I'm earning some interest. I just wanted to say your argument still stands if you are earning a small amount of interest. Well, if you compare that small amount of interest versus inflation, you're actually losing out because very rarely does the interest you earn actually outpace inflation.

32:57And then you go, well, I'm leaving my money in savings because I'm scared and I want safety. But you're actually guaranteeing a loss versus inflation. So the thing you're afraid of losing money is the thing you guarantee by keeping your money in savings. And I just want to help these people see it and help them see they could be so much better off than to get their money invested. But it's fear. And the thing we've learned over the years is what you're afraid of, you end up doing weird stuff to avoid, which actually creates you're afraid. Right. They're literally leaning into the thing that they are scared of the most.

33:38That's yeah, that's crazy. But yeah, I see it over and over again. And just a couple other super quick things. So your home equity, I think this is something a lot of people get bogged down in. And we've seen this in this whole middle class trap argument. nonsense is in general terms, your primary residence home equity does not, it counts in your net worth. When you're just collating your entire net worth, it counts, but it's not part of your investable assets towards your FI number. So this is a really important distinction. You might be wealthy and have a couple of million dollars in home equity in some weird fringe case where you live in California and you have$3 million in home equity in your home, but only a couple hundred grand in investable assets.

34:19The simple fact of the matter is you're not FI. and that's fine you you know that's okay but you've made a decision and that's the other thing is you've made a decision and you keep making a decision every single day to keep living in that house now you could be fi almost anywhere in the world other than in that space in that house so we all make decisions and you can make whatever decision you want but it's important to know that the money that's just sitting there in your home equity we just don't include it in our number and that's why we made that visualization to help people to see it and when you can see that rather than just numbers and zeros and commas and stuff to actually see it as the size of it comparatively to the other elements is really powerful and that's what we found from showing that to people because the extreme example you just said is actually a real example from a friend in the uk he had a very nice apartment in london that he bought in the 80s london went up ridiculously.

35:15He's worth three million pounds, but he hadn't saved or invested anything outside that. So he's worth a fortune, but cannot retire. And he wants to live in that one house. And his entire net worth is tied up in a valuable liability that you can't live off. You can't eat the bricks that you live in. It won't feed you. You need money to buy pizza and other essential items. I think in that simple scenario, we would have been willing to eat the bricks. I would have eaten anything at that point. I mean, seriously. Yeah, at that point. Let's be clear here. But yeah, like I said, we'll include that link in the show notes.

35:53But lest anyone, I'm sure there'll be people yelling about the valuable liabilities and house versus car. And obviously cars are depreciating assets. In most cases, homes aren't technically depreciating. They're appreciating by a tiny little bit. But like you both talked about, there's just a ton of expenses that go in annually into your home. And when you do any type of simple scrutiny over how much money you're spending in your home, it's a whole heck of a lot. So I don't think anybody factors that in when they're looking at the return on their primary residence. And I think the other thing is a lot of people who aren't in the fight community aren't saving money.

36:29They always look to, oh, but my home is my biggest asset, my biggest source of net worth. And like the sad fact is that's true, but that doesn't mean it's the right thing to do. It's an artifact of nobody else is saving any money, and therefore, their home is the only shred of wealth that they actually have. And you just do a simple compound interest calculator. I think I went to NerdWallet and just typed in, like, hey, I'm just saving$500 a month at a simple 8 % return for 30 years. You're going to have three quarters of a million dollars. In this case,$745 ,000. That's$500 a month. If you're making a hundred grand across two of you and you save$6 ,000 a year, that's only 6 % of your gross income saved.

37:14And you're going to have three quarters of a million dollars. That's going to almost certainly outpace home equity for the vast majority of people. And that's not a five person. That's just a regular person saving 6 % of their, of their gross income. So I find it really hard to imagine almost anyone other than these fringe cases, almost anyone in the fight community is going to wake up in 30 or 40 years. with their home, the home that they live in, as the biggest source of their net worth. I just, there are fringe cases, of course, but come on, guys. It's so fleetingly rare. It's crazy. It's fleetingly rare in the FI world.

37:47I think it's the norm in the rest of the world, which is a really interesting distinction. And then you go, well, we're trying to reach out to people in the rest of the world and help them to come over to our side and get investing and to earn money. And I think to back up your bit about the homes, the reason everyone thinks homes are so good is the back of the envelope maths that everyone does. I bought it for 100 grand 20 years ago, and now it's worth 250. Therefore, I've made a 150 profit. And that's literally the back of the envelope maths that people do that doesn't include your cost of buying, your cost of selling, all of the other costs that you have.

38:28but that back of the envelope mass is what makes property have a good name in this world and you hear people like literally saying i bought the house for this i bought the house for that that's what i've got yeah it just it doesn't work that way but it's too hard it really is too hard for most people to actually do the calculation myself included and uh and yeah the simple thing is just to look at that but also they don't even realize like the amount of time like most people don't understand the length of their lifespan it's like if you bought a house for fifty thousand in 1985 and it's 40 years later and it's now worth 400 ,000.

39:02That sounds like an amazing thing, but you would expect that to double. If you had that money in the stock market, double minimum four times, probably closer to five, right? So that's a hundred, 200, 400, 800 ,000. And realistically over 40 years, it would probably be closer to that next double, getting it closer to 1.6 million. That vastly outweighs the, Hey, my house went up to 400 ,000. And that's even just the rudimentary way of looking at not counting all these costs. So I think very rarely, this is a very long way of saying like your home is something to live in and that's very important, but let's not misconstrue it with like the most valuable asset for people in the five community.

39:41Thanks for listening to choose a fi and for all your support of our mission here. The absolute best way to support choose a fi is when you sign up for your next rewards credit card to use our cards page at choose a bi.com slash cards. I keep this page constantly updated, so it should always be the top resource for you. Thanks for being part of our community and for your support. So why don't we shift gears to talking about something that is the most valuable asset for most people in the FI community. And this is our mutual funds and index funds. And there's been a lot of talk recently about people not believing that when the time comes, that those of us in the FI community will be able to sell our shares and live off essentially the 4 % rule, which is just, hey, I've put this plan in place for 10, 15, 20 years.

40:32I've reached the point where I'm FI. And then that literally selling the shares will be so insurmountable psychologically that they won't be able to do it. And therefore, in essence, the logical conclusion to that is like FI is junk and this doesn't work, you need some other type of income stream. I've been on record saying I think this is utterly preposterous to the highest level. Have you heard this talk at all? Has this crossed your plate? I think there's a whole piece of like, oh, all of the bloggers and all of the five celebrities. I don't know what the right word is. I think the word, Alan, is content creators.

41:10Content creators. Thank you. All of those people, well, they've proved it doesn't work because they still earn money, which is a really weird logic of because they still earn money, it doesn't work. And one of our favorite examples is Christian Bryce from Millennial Revolution. And they actually split their portfolio into portfolio A and portfolio B. And they retired on a million, and they kept that million in portfolio A and go, have we been able to live off that? And then anything extra that they've earned through books and other stuff, they put in portfolio B so that they could have the purity of the 4 % rule test.

41:48And they're still going... Because of this very debate, right? Like, oh, well, it doesn't work because you've just earned more money afterwards anyway. Yes. That's exactly why they did that experiment. And they update it every year, tell whether it's worked or not. And it has. And it's really interesting. Like, it's this fear and this doubt of does the stuff actually work? But having invested, we started investing in 2015. So it's been about 10 years now. And our net worth has over doubled since we retired six years ago. So I know you said like the stock market doubles every nine years, like our experience has been it's more like six.

42:27And it's kind of mental seeing it happen. Then you feel a bit more comfortable and a bit more relaxed. And people are like, well, no one ever sells any shares. I sold 10 grams worth of shares to buy universal trip tickets to go on roller coasters and to do cool stuff for our wedding anniversary. Like I sell shares to do cool things. Why would I not? Like I've spent years building up the portfolio to get to a point where I can spend the money to have an incredible life. That's the whole purpose of this. And I think even if you didn't need to sell those shares, if you had income that covered your lifestyle from other things, whether that's businesses or whether that's whatever it is that that income is coming from, that doesn't mean that the 4 % rule doesn't work.

43:15It means like, why are you going to sell your shares if you don't need to? It doesn't make any sense. Right. It's this weird purity test. Like the only people that are living the FI life for those who are selling explicitly and only 4 % of their assets every year and making$0 of income from anywhere else. That's so preposterous. I mean, we're the smartest, most industrious people in the whole world, in the FI community. And to imagine that we're not going to make money from something else ever is ridiculous, or that we're going to have rental real estate or some dividends that happen to come in, whether we're overtly doing that or not, or have some little pension or have some social security.

43:52That doesn't render the entirety of FI null and void. But it's so stupid. When you say it out loud, it sounds so ridiculous, obviously. But also, and I think this is really important, is selling shares. Okay. You have saved your entire FI journey. I won't say your adult life because there are many people who get into FI after they've gone through some financial difficulties. But on your FI journey, you've been saving money. And now comes the time, whenever that is, and whatever percent of your annual expenses it is you need to cover by selling shares, whether that's a hundred percent of your income that you need to cover each year or just a portion of it because you have other money coming in.

44:32It doesn't matter, right? Like it still works, but you have to click sell. And listen, I'm not going to lie. I think that will be hard, but I think it will be hard for five minutes. Okay. Like I think it legitimately will be hard that one time, the very first time you go to log into your brokerage. And instead of buying shares, you're selling shares. I legitimately think it will be psychologically difficult, but we're adults. We do hard things. This is part of being human. What are you going to do? Cry and run away. Like I'm purposely playing this up, but like literally, what are you going to do?

45:08Cry and run away and say five doesn't work because you can't type a couple of digits in and press the button that says sell like five doesn't work. It's null and void because you experienced a little bit of discomfort for five minutes. Are you freaking kidding me? Like, honestly, are you kidding me with that line of reasoning? And like, there are legitimate people who have this line of reasoning. And I think it's the dumbest thing I've ever heard. I think it's like, if it was said by the Susie Orman's the world, we'd be calling it absolute clickbait nonsense. And on mass, we'd be yelling at them.

45:40This is unbelievably stupid. And I just simply won't stand for it. It is going to be hard and it'll be hard for five minutes, but you're an adult and you can overcome things because you've overcome things your entire life. And then you don't want to know what you are the type of person then who sells shares. And the next month you just log in merrily whistling all the way and you click sell. And then the next month it's even easier. And you're just a person who lives off their assets. Then it's interesting to think about the fear that people might have had when they started investing and started buying, right?

46:17Like people are nervous and scared to buy those stocks for the first time, for the first few times maybe. But when you get used to it, they whistle merrily in and buy, right? Even when it's going down, they're like, stocks are on sale, let's buy. So it's exactly the same. It's just something that you get used to. I think there are a huge number of people out there who literally organize their lives to avoid ever having to sell anything. so they will over earn and buy dividend stocks and do all this other stuff just so they can live off the dividends and never have to sell anything and we actually had an example come in through that didn't we should we read the example yeah okay hi brad huge fan of the show five years ago i had a dream of being able to retire early via dividends covering my life costs so this person is literally trying to get just the dividend portion of their income to cover their entire life costs.

47:16On the show, I've heard you mention dividend investing is sort of a third rail of investing. And I'm not sure if I'm making a mistake with my plan. I'm 44 years old and have a net worth of five and a half million dollars. My brokerage pays me 105 grand a year in dividends. last year it was 87 the year before it was 58 my goal is to get that to about 120 which we are close I love my job want to keep working as long as it's still fun am I way off or do you think dividend works if you can live off the cash flow while investing overflow back into VTI or VOO etc hmm well yeah there's so much i i definitely obviously want to hear hear your opinions on this but just to be clear like getting dividends from your investments is not a bad thing when you invest in mutual funds and etfs you are going to get dividends because some of the companies in those funds just kick off dividends that's part of their corporate strategy and they kick off dividends and that's great.

48:28Okay. So I'm not telling them to send them back. I don't want them just throw my money out, you know, rip up the check, right? Like those are great. I think where the third rail, the quote unquote third rail investing comes in with like people who are overtly following the dividend investing. And I think of it as capital D, capital I dividend investing strategy. And like, they're just buying stocks that kick off big dividends. And like, that's their strategy. I think that is a significantly suboptimal investing strategy because basically a dividend is just part of the company. The company is just returning a part of itself to the, the owners of the company.

49:06And you are one of the owners of the company and they're sending a piece of your company back to you in what is a forced taxable event. So dividends are taxed and you're losing flexibility. I personally don't like to lose flexibility in any aspect of life. So I'm getting this forced taxable event. And basically how I look at it is like companies can do a lot of things with their excess cash, right? Like they can give dividends, they can repurchase shares, they can buy new companies, they can pay down debt, they can do a whole bunch of things. And really dividends, I jokingly call it like meekly capitulating is what they're doing because they have no better use for the money than just kind of meekly paying it back as a dividend.

49:54And I just would rather have companies that aren't at that point in their growth or their lack of growth cycle, where they have nothing better to do. They can't invest in new business lines. They can't upgrade their facilities. They're just kind of rolling along. And those can be great companies, let's be clear, but they are just doing their thing. And that's not necessarily the companies that I want with all of my assets. So those are like the people who are dividend investors. And, you know, listen, is dividend investing better than sticking your money in a checking account? Of course it is.

50:27We're kind of like splitting hairs here at the end of the day, but I just think it's a suboptimal investing strategy. Now, Sean is talking about something else. Sean is basically, it sounds like he's investing in VTI or VOO, which are the Vanguard total stock market and S &P 500 ETFs with a lot of this, but he's trying to get the dividends from those funds to pay for his life expenses. And while that's not a terrible plan in and of itself, it sounds like he is probably fat five by a significant margin because I think those funds give off under a 2 % dividend or thereabouts. I'm just looking up now 1.2%.

51:111.2. Oh goodness. So if Sean gets to the point where he's living off the dividends, he's basically doing a 1.2 % withdrawal, which means by a factor of three, he basically overworked. He's fat five many times over. And that just seems kind of crazy to me. And it also suggests that I think people misconstrue dividends as some kind of magical income when it's really not, It's only dividend income because we call it dividend income for tax return purposes. It's like the company's just giving you some of the cash back that they have sitting in their bank account. Like it's not magical income. It didn't like, of course, it ultimately came from income within the company, but it's just money sitting in their bank account.

51:53And they said like, Hey owner, take a dollar of it. Like that's what they did. Each owner gets whatever cents or dollars per share that they gave back. Like there's nothing magical going on here. So I think Sean is like, it's kind of conflating some things. We had a little look at the numbers and it was like, well, the aim was to live off 120 grand a year and you've got five and a half million dollars net worth. And when we read net worth, we were like, well, OK, that total net worth probably includes his home. Maybe didn't. But let's just imagine it did. And he's only got four million invested at four percent.

52:27That still gives you 200 grand a year to live off. So he's like way past his number. and that's partly like sometimes and I don't know whether this case with Sean but I'm going to like generalize everyone to listen to is that I don't want to sell stocks off so I'll just live off the dividends then you have to go way past your number because they don't pay that many dividends and you end up working years longer than you needed to which Sean said he loved his job wants to keep working that's cool but as a suboptimal strategy like you were done probably five years ago well yeah if you think that his aim is 120 grand times 25 that's three million yes he's got five and a half nearly even if his home was worth two and a half million then he's still fine which is great which is great news for sean right that's absolutely wonderful and it's it's interesting that i love my job and want to keep working as long as it's still fun sean that's fantastic right And I would argue to anybody out there, that's fantastic.

53:26But it's kind of this misdirection. It's like a red herring kind of argument of, it doesn't matter. You can stay in your job as long as you want to. That's great. But that's not relevant to, I'm pushing back my fi date because I happen to love my job. If you love your job, stay in your job, whether you're fi or not. but don't arbitrarily say I'm not fi yet and misconstrue the math based on some conflating, like, but I love my job. Like if you love your job, stay in your job for the rest of your life. That's great. But I think we also need to understand like with time and resource freedom, we have every option in the world, literally.

54:10So this is another opportunity cost argument, right? It's like, Sean is saying like, yeah, I love my job, but my counter argument would be, Sean, you have enough money to do whatever you time and money to do whatever you want in the entire world. So in the range of literally billions of options is the number one on that list. When you rank order the billions of options of things you can do with your time and money, working at the exact job you're in, in the exact capacity for the exact number of hours with the exact people. Like if that happens to come up number one, oh goodness, you should play the Powerball every single day of your life.

54:45Like you are just, it's amazing. You've killed it. Like it's, I'm a little snarky today, guys, if you can tell, but very good nature. What are you doing today, Brad? I love it. You're really getting into this. I love it. In a very good natured manner. I hope everybody can read that. But yeah, I'm a little on today, but it's impossible. And I hear this all the time, but I love my job, but I love my job. Like that's freaking great. Stay in your job. Okay. But if you're actually honest with yourself, You have all the options, the entire world, the chance that you would pick your exact job is approaching zero.

55:16Now, what that could mean is, Hey, I do love aspects of my job. I want to stay in those aspects. Like that's a different story altogether, right? Like for a certain percentage of it, or for a certain number of weeks or months a year, like again, totally different. If by some chance that is in those billions of options, that is at the very top rank ordered. But I still find that relatively hard to believe but if that's you then that's great like what do they say i tap dance all the way to work right like a warren buffett style so do your thing but what do you guys think about this i think there's so many options in the world and i think i'm not going to speak specifically about sean but for the the whole and i'm not picking on sean let's be clear like we're giving my grave and written in no sean's wonderful thank you for writing sean then let's be clear sean is killing it sean is fat fi rocking and rolling loves his job this is great i mean sean has a wonderful life it sounds like and he's a huge fan of your show brad so which is amazing thank you as well yeah hey i like it uh so that i've completely forgotten what i was gonna say something whilst you do that which is to broaden the point so we're not necessarily talking about sean here but for people that say well i love my job and often they might use that as a reason not to sort their finances out or as a reason to kind of stay in their job or the one more year syndrome.

56:37I think often it's this whole psychology in there of maybe fear of the unknown or kind of a bit of avoidance of thinking about how you want your life to be. And it's like, well, this is quite good. So I'll just keep this. It's the avoidance of thinking. It's easier to stay in a job that you love than it is to think, oh, what about that dream I had as a kid? Or could I do this? Or what else could I do? it is easier to keep status quo than it is to think and i think a huge number of us are anti thinking and then anti the action that comes afterwards and that might be because like thinking takes up lots of calories so let's not do it that's just so much evolutionary type evolutionary why we don't like to think as humans but we generally don't but it's actually a really tough thing to think what would i do with my life if i wasn't working and that's why people put it off till after they finish working and then they have to crash but I'd say to everyone that thinking is critical no matter what stage you're at even if you've just started your job start to think even more like is there a better version what could I do how could I get promoted where else could I go that's the thinking that leads you to where you want to go to and we know that that's difficult and we've got a little pdf guide that we can put in the show notes that helps people think through which is the one brad did in bali at the event oh yeah all the questions for the different life areas to think through like where would you live if you had to what job would you have if you had to career a mission and all of the different questions you remember that workshop of course i remember yeah in fact i was just chatting with erin about this recently where we were talking about like the it was just such a wonderful two-part section of of the entire retreat where you laid these parts out and then we had dedicated time to spend thinking and writing about them and it was uh focusing on the ones that that we really that impacted us the most that was a highlight of the retreat so for everyone listening to this we'll put it in the show notes you can download the guide it is a set of prompts to help your brain think about the next version of each area of your life because it's very difficult to answer the question what do you want?

58:59Like if you stare at someone and go tell me what you want like they'll literally freeze their brain will go I can't cope with that question and it will stop whereas if you break it down into areas and you go okay what do I want my life to be like in health and wellness like you start to ask the questions what does a healthy lifestyle look like for me? How do I want to feel in my body when I wake up? How do you take care of your body and mind? What are your fitness goals? How do you manage stress? And there's a bunch of questions and prompts to help you think about how you actually want life to be like.

59:33And it's really interesting when you start to do that exercise, you start to have a little bit of a wake up call and go, oh, maybe I'm not at the optimal place I want to be at in all of these areas. And that's what will happen when you start to think about them. Yeah. And I think that's another cool aspect of FI is that this is so not just about money. It's almost silly to think that FI is just, I couldn't have done 700 plus episodes if it was just about the nuts and bolts of money. It's, that's a tiny fraction of this, right? It's just, you get your money straight so that you can live a better life.

1:00:10And there are fleetingly few people who have nailed all eight aspects of the life as you've delineated it. And that's okay. We're all works in progress, right? Like we're all just trying to figure it out. And nobody has it all figured out. Nobody does. And even if you did on some level, like the world keeps moving. Your life keeps moving and changing. Like it's constantly changing. You have to update your thinking. And all three of us see this constantly in our own lives. Like, again, going back to 2020 to 2022, you probably had grand ideas of what your life was going to look like for the next couple of years in terms of travel and how you spend time and who you spend time with.

1:00:49And like, undoubtedly, that has changed dramatically. And that's OK. That's not a failure. It's not 2021 Alan and Katie are failures. It's you've learned things along the way. You've updated your thinking and you're going to move along accordingly. And that's that's what it means to be human. And actually really cool stuff comes out of it going away. You didn't expect we wouldn't have developed rebel finance school if we hadn't been locked down in the UK with nothing to do. We would have been doing very different stuff. And that's one of the things that we're most proud of that we've done ever.

1:01:22Well, I'll speak for myself. That's one of the things I'm most proud of. And I am too. Quickfire one off the list, Brad, because I thought it would be quite interesting. People misconstrued your comments about Tesla as political. I'm interested to know, like, was it political? Was it not? No. Yeah, this is funny. I'm glad. Yeah, this was one I put on the list that I wasn't sure we're going to talk about, actually. But yeah, it's funny how I think this is what happened is on the J.L. Collins episode, I might have called Tesla a meme stock. and this naturally enraged a bunch of people who are Tesla diehards.

1:01:57But it's hilarious because I think people looked at that as political and anybody who's been listening to this podcast for the entirety of it knows I'm not a huge Elon Musk fan. This goes back to 2017. And while I think what Tesla has done to a large degree is very positive, I think the valuation of it is absolutely insane and not tethered to any type of reality. And I think almost by any definition, It's a meme stock and just almost by its definition in that like this is a declining car company that's declining year over year. And they're basically basing a couple trillion dollars in value on things that are total vaporware.

1:02:36Essentially, this, you know, robots and the and this robot taxi when Waymo is actually already producing an autonomous vehicle and has been for years now. and Tesla is in this tiny little geo-fenced area in Austin. And when they did their robots, like at one of their most recent events, they literally had someone behind the stage like orchestrating the robot. It wasn't even an autonomous thing. It was like by anybody else, it would be fraud. But because it's Tesla and Elon Musk, it's like, it's okay. So anyway, I just, I think anybody who looks at valuation aside from these Tesla diehard. So essentially the only people who could say like, like, oh, Tesla is worth its valuation, are the people who have made a lot of money from Tesla.

1:03:20So you're almost proving yourself that way. And I guess just the political aspect is like, if people thought I was like yelling at, oh, Elon's a bad person because he's friends with Trump. Well, do those people now agree with me? Because now the first buddy is like the first enemy. So it's kind of, it's just hilarious on its very face. Like, are those people now cheering me on because they misconstrued that I was saying it as a political matter? I wasn't saying it as a political matter. I think, yeah, he's a charlatan to a large degree. And that's fine. He has produced great things, but he's also produced a lot of promises that are not even close and some things bordering on fraud.

1:03:57So yeah, that's kind of my two cents. But yeah, it wasn't political in any sense. Yeah, it's interesting. And when you get into like the whole stock picking thing, that's when Katie and I go, we don't really care about which stocks do well, because we just own the index fund and we forget about all of it, which is the simplest way to do it, then you don't even have to think about which company is valued, which price. There's many other exciting things to think about. What do you like to think about, Alan? Let's not go there on live show. Oh, you too. So yeah, let's... Anywho, it will be the transition.

1:04:37So yeah, I know I have a hot take on that. But yeah, if this is a car company, it's overvalued by 90 % and the stock should be cut 90%. If it's based on fictional things that might be in the future, well, when those fictional things do or don't come to pass, then great. And then it's worth something. So, you know, we'll kind of see from there. All right. I think we should move on from that one. Yes, let's move on from that one. Katie. Why do you dislike the Robinhood app, Brad? You're just trying to incite me today, aren't you? I can see you're on a roll. Yeah. Shall I give that a bit more context?

1:05:14Sure. So this is a message from Kyle. He says, I consider myself a new FI-motivated individual. I've been investing extra income into a taxable account after building my emergency fund, reducing debt, and contributing to tax-advantaged accounts. Good work, Kyle. Well done, Kyle. Can someone explain the level of disdain Brad has? We'll come back to that, Brad, if there is a level of disdain. Is it simply because it encourages a gamble style of investing or is there a larger problem with the platform? I was attracted to it a few years ago when I first started this journey because of its user-friendly interface.

1:05:49I use it to purchase mostly broad market ETFs and a couple REITs to have some skin in the real estate market. Have I started the taxable brokerage portion of my five journey on the wrong foot? What a great question. And I love, Kyle's a great writer, by the way, the level of disdain Brad has for Robinhood. That's great. Well, first off, Kyle, you're crushing it. You're absolutely doing great. So there's no worries. Take a deep breath. You are doing wonderfully, my friend. So do not worry. You're not on the wrong foot. Everything's fine. It sounds like you're investing in a very intelligent manner, as would befit a listener of Choose a Pi.

1:06:24So I have no issues there. Yeah. I mean, as you said, very simply, it is because it encouraged a gambling style of investing. And I don't think there's anything more there. I think over the years, there have been some allegations of some other minor issues with Robinhood. I don't really believe any of those. They're a publicly traded company at this point. They're doing exceedingly well. I don't have any issues with Robinhood. Other than that, it seems like the app has always been geared. And in fairness, I haven't logged into the thing in a couple of years, so it may have changed. I don't think it has, but it has always been geared towards basically addicting people to gambling.

1:07:02And there are a lot of apps that addict people, especially a lot of young men to gambling and just actual gambling. And I think treating investing as gambling is what a lot of people erroneously do. And the three of us know investing is a long-term pursuit. This is a, for us, for the three of us, it's a 50 plus year pursuit for many people that maybe Kyle's just starting out. It's a 60, 70 year pursuit. It's not about, Hey, Robin Hood showed me these, this confetti and green today because it went up or red because it went down and it's yelling at me like, and, and I'm kind of making that up, but, but not all that much.

1:07:41And they just facilitate, they facilitate a gambling style and listen, they're a company. It's served them well. Their stock is flying high. I don't normally take that approach, but they can do what they want. I don't think they're bad people necessarily, but I just think it leads to some problematic behavior potentially. And if all things equal, would I rather someone invest at Vanguard, Schwab, or Fidelity? Yeah, you bet I would. But is Kyle on the wrong foot by investing in low-cost index funds and ETFs at Robinhood? No, I don't think so. What do you guys say? Have people asked you about Robinhood?

1:08:13It's come up and there's plenty of other platforms that are exactly the same. and I just like looking at the homepage of Robinhood, the opening banner is built for the future of trading. Analyze, buy and sell with tools purpose-built for how you trade. And then they show candlestick indicators and graphs and all of the other stuff that we know is about trading. So the whole platform is built around the idea of trading. You can use that tool to buy index funds and you can absolutely do that. and there's no cost to doing that but we generally have a problem with platforms that sell you on those stocks because we see people get bored into it it's like oh they flagged up this stock maybe will do well and it's showing well on the candlestick indicator and the confidence this and you know opaque darkness of future possibilities level indicator it'll do well and we kind of have a problem with them like selling that because we know people get bought into it then they come back to us and say should we do this to which we then go no don't do that just stick with a simple index fund but you can use that platform to get an index fund same with all the ones in the UK yeah it's just whether you kind of trust yourself to not be sucked into the stuff the trading outside of it which our philosophy is don't go anywhere near that and I think it's slightly different in the US because you don't tend to have any fees to use the platform as a provider whereas most other countries that we've come across do that you do in the UK there are a few free ones now but most platforms have a fee so a lot of people get sucked in by the fancy marketing of those platforms and then they'll have a high fee to use the platform so what we always come back to are what are the fees and what are the funds you can invest in and what are the fees on those funds so when i said fees the platform fees and then the fund fees and just minimize those and if you can ignore all the other stuff around it then go for it but if you're ignoring all the other stuff around it why are you going for that slick app anyway right that's a really great point yeah anytime i hear the word trading it uh it just kind of gets my spidey sense up it's uh we in the five community are not looking to trade we're looking to invest over decades so So yeah, if a platform is saying trading is what sets them apart and a lot of this gamification and gambling style behavior, I think you probably should look elsewhere.

1:10:45There are plenty of other platforms. But yeah, are you going to go wrong at Robinhood? I really don't think so, as long as you're diligent about not getting sucked into that. So yeah, thanks for the question, Kyle. Well, it'd be really cool to gamify it, to incentivize you to do the things that we think would be the right behavior supposedly of like okay run streak you have been invested for this long and you haven't sold you haven't done anything you're on your way to fi and you've just left it be run streak 371 days it'll be quite boring it would be amazing 371 days of doing nothing celebrate and go back to doing nothing that would be cool sit on your hands and do nothing.

1:11:27That really, incredibly, that is the investing strategy that works the best. It's kind of wild. All right. Well, as always with our fun conversations, we could literally do this for three hours, but for the sake of Andrew, our editor, we'll wrap it up here and maybe we'll do another one real soon because this is a blast. Let's finish off with something fun. So every so often in my newsletter, I put a section I call what I'm reading, watching, and playing. And I'm curious to you two does anything jump out like what are you and i know you are traveling you're in brazil you're always up to different uh projects and things so maybe that even gets included in some of these but like anything jump out for reading watching playing anything that has been interesting you guys recently oh we saw the latest superman movie and it was excellent i'm very much yeah james gunn's superman was fantastic we've been enjoying going to the cinema there's like the big imax the big experience big screen sound we've absolutely loved going to the cinema we just make sure that the subtitles rather than it being dubbed oh yeah understand portuguese yeah this is not a problem anyone in america will have i assume that's cool okay so that's watching i guess for me i've been watching recently my my favorite show my favorite TV show of all time is the West wing.

1:12:50And it's incredible. It came out in, I think the first season was 1999. So it's more than a quarter century at this point, but it still holds up. I went back, I've gone back to the beginning, watching the first season. And I think I'm eight or nine episodes in, and it's just wonderful. It's a, I'm so, I'm so sappy when it comes to stuff like this. Like I, I cried more at the West wing than virtually anything else on earth. And I'm like, I just find it so beautiful and like how the world can be, how government can be, how effective we can be when we come together. I just I really like that show.

1:13:22So. So, yeah, I picked that up very recently. I would add one more that we absolutely binge watched, which was called Paradise. It's on the Disney Plus Star Service. And I won't give it all away, but it's like a protection agent for the president. and the story was just gripping. And then I think it was the penultimate episode was one of the most emotional, harrowing episodes we'd ever seen. It was fantastic. Did I cry? Yes. Okay. Paradise. Well worth watching. Huge twist. Really good. Okay. What streaming or where can you find that? Well, we watch it on Disney +, but it might be different. I think it's called Star or like a Disney +, a side one.

1:14:07Okay. All right. yeah we'll check that out and yeah my i i have it on i well i'm not sure what it's called at the moment hbo max or whatever is where the west wing streams in the u.s it might be hulu hulu okay cool well check it out obviously it is different everywhere you guys are in brazil right now and you're so we'll figure it out anything else have you guys played any games done anything fun like that we're in the phase of running rebel finance school so we're running right now which has turned into a huge project because we did opening episodes and we did bonus episodes so it's actually turned into three months of every Monday and every Thursday running live streams we've got 23 ,000 people from 48 countries on the course and we wake up thinking about how to serve them and how to help them and we get annoyed when we get tired because we can't keep going which is how you know that's the sign of you are living life on purpose is you're annoyed that you're tired and you just want to do more fun stuff that has been is that a long way of consuming saying that we've not done much else we run on the beach we go swimming we work on helping people with their finances and i will be excited to have a break afterwards oh i believe my birthday is coming up and we are going to be in la for my birthday living in venice beach for a little while so i think we're going to go to the avengers campus at disneyland for my birthday Oh, baby.

1:15:34Oh, that's cool. That sounds like fun. Want to comment? I might want to comment. You know, I've never, I've never been to LA. So, so hey, you never know. You never know. You've never been to LA. Yeah, you're both a guest. Nope, never been. You can parade that wonderful six pack up and down the beach. You can get day passes to the Muscle Beach gym at Venice Beach. We looked it up yesterday. So we're thinking of getting like weekly or monthly passes to the Muscle Beach gym and going and working out on the beach in Venice Beach. Oh, that would be fun. I'll do that with you for sure. That'd be awesome.

1:16:05That'd be awesome. Okay. Okay. So to be continued on that, that sounds like fun. So, okay, I'll wrap it up with just what I've been playing recently is, so the New York Times has an app for their New York Times games. And I've been doing, I love the game Connections. And it's basically this like four by four grid of usually single words. So it's 16 words, and you essentially have to group them into four different groups. So there's some connection. There's a tie that binds. It's a logic puzzle in essence, but it's really fun and it's surprisingly difficult. So yeah, it's just a fun game. So I've branched out now a little bit every morning.

1:16:44I do, I open my New York times app. I do that. I got back into Wordle after like many years. I just started doing that recently and they have a little mini crossword puzzle and it's just like essentially how fast can you finish it? So it's usually a two or three minute exercise. and yeah even every so often i do uh sudoku lots of logic puzzles for me so i've been doing that can you do cryptic crosswords are you doing the non-cryptic version oh i'm doing just the regular this is just like a regular crossword but they call it the mini so it's usually it's usually somewhere in the order of like 10 different clues so it's really really quick so yeah just kind of a fun thing i think if you then this is just the free version if you subscribed you can get a bunch more but yeah that's my little fun every morning and i started playing a new board game with my daughter is called i think it's called skull king and it's it's a card game it's a trick-taking game that is really fun it only takes maybe 20 30 minutes it's similar to a lot if you're familiar with trick-taking games like spades or hearts or euchre something like that you'll understand the basic mechanics and it's like 10 rounds so you have you start with you each have one card the first round, then two cards, the second round, three cards, the third, and you have to basically bet how many tricks you think you're going to win.

1:18:02So it increases in complexity as you go through the game because then more cards are out. So it changes and then you're always playing off the other people. And then I guess in this game, the Skull King, there are something like a handful of additional cards that are just like these extra bonus cards that add again, a further little wrinkle or complexity. So it's one of the most fun games, new games that I played in a long while. And I think it's cheap. It's like one of those Grandpa Beck games. They have another game that I like called Cover Your Assets, which is a fun one. It's a little money related, but not so much.

1:18:35But another fun 10 or 15 minute game for people to check out. But yeah, I like it. I feel like it's maybe 15 bucks to buy this game thereabouts. And yeah, I would suggest it. So that is what I've been up to, my friends. That sounds fun. It's a beautiful way to start the day. And we love a good game. Bring the card game next time we hang out. Sounds good. We will enjoy that. It really is fun. It's a good one. So, all right. So, everyone, thanks for being part of this conversation. This really is something that maybe it's a little more formal than Alan Katie and I usually do, but it's not all that dissimilar to some of the things.

1:19:09And, yeah, I guess I got a little riled up in there, but all in good fun. And, my friends, thank you for being here, as always. So, you're doing Rebel Finance School right now. I'm assuming by the time this goes live, that'll either be over or just about over. But if people want to find you, where's your like your main website? Where can they find Rebel Finance School either to watch replays or sign up for next year? Yeah, Rebel Finance School is going to be going until mid to late August. So come along and join in on the fun. And we leave the videos up for a good few months afterwards. So if it's not up, then you can just sign up for next year.

1:19:46And the best place to find about us and what we're up to is rebeldonnegans.com. That's where you can find us. that's where all our stuff is all our latest thinking articles and blog stuff or obviously we just love coming back on brad's podcast and we're the biggest fans of choose fi ever thank you guys yeah we're going to do a lot more of this this is a lot of fun so uh yeah hopefully every couple months we'll jump on and just do a fun little episode so uh yeah this is great thank you as always for being here and to everybody who's listening like we talked about a lot of this comes down to just thinking clearly just updating your your thinking looking at the world as it is, not how somebody told you it was or how you want it to be.

1:20:25And, and things change. And that's, that's a beautiful part about being human. I think that to me was the through line of the episode. And I thought this is fun. I hope you enjoyed it. And until next time, thanks for listening to choose up. Thank you for listening to today's show and for being part of the choose a community. If you haven't already, the best ways to get involved are first subscribe to the podcast. So you're listening to this on a podcast player and just hit subscribe and then subscribe to my weekly newsletter. I actually sit down every Monday and write this by hand, and I send it out Tuesday morning.

1:20:58So just head over to choosefi.com slash subscribe, and it's really, really easy to get on the newsletter list right there, and I would greatly appreciate it. It's the best way to get in touch with me. You can actually just hit reply to any of those emails, and it comes directly to my inbox. So that's the way that I keep a pulse of the community and how we keep this the ultimate crowdsource personal finance show. And finally, if you're looking to join an in real life community, we have choose a buy local groups in 300 plus cities all around the world. So head to choose a buy.com slash local, and you'll find a list of all of those cities in 20 plus countries all across the world.

1:21:36And if you're just getting started with five, or you have a family member or a friend who you think would be interested two easy ways. Chooseify episode 100 is kind of our welcome to the FI community. And even though it's a couple of years old at this point, it still stands up and it's a really great just starting point to get an understanding of what is financial independence? What are we doing here? Why are we looking to live a more intentional life where we save money and use it as a springboard to live a better life? And then Chooseify created a financial independence 101 course that's entirely free.

1:22:10Just head to choosefi.com slash fi101. And again, thanks for listening.