Financial Advisors React to Wild Money Advice

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1:10Hey guys, thanks for having me back. I am so excited that you are here, Aaron, and I can't wait to see what the internet has in store for us this morning. What's the first piece of advice I give my kids about money, and the last piece of advice, and the advice I always give them? Don't spend it. Save it. Invest it. Let it compound. The market gives you 8 % to 10%. Take 15 % of every paycheck. I don't care how big it is or any gift granny gives you or anything you get on a side hustle and invest it. And then by the time you're 65, it's you. You'll have millions in the bank. Even if you only have a salary of$65 ,000, the average salary.

1:45This is what the market gives you. Just don't buy crap you don't need. I love it. 100%. I love it. All of it. don't buy stuff you don't need to impress people whose opinions do not matter. Everything that comes in, save a little bit of that, put it to work, invest it, and building wealth is not all that complicated. If you think other people are thinking about you, they're not. They're thinking about themselves and their stuff and what they're doing with their money. And also, Mr. Wonderful, kudos. He has the best marketing. Who else can call themselves Mr. Wonderful? I think it's great. I just appreciate you put on pants for this video.

2:18I don't wear pants anymore. I don't have any pants on right now. I have no pants on ever. And so, because I look spectacular with this tie and jacket on. He's like the mullet of his attire and the fact that he's business up top, but then he's all party down below with no pants on. I have not seen this. Guys, that's how I film. Are you serious? Yes. I'm dressed up from the waist up and that is sweatpants. Bare feet. A HELOC, when used for things that create more income and wealth, can really produce far more profits for you, which you can then use down the road on which one items. Who needs shelter?

2:56The best rule of thumb when building wealth as quickly as possible is really to conserve your funds and availability of capital and delay gratification on lifestyle purchases. Okay. That was a solid part. I like that part. He closed with a strong. Delay gratification. Was he suggesting that the strategy ought to be to lever up as much as possible, borrow as much money as you can, and put that money to work in order to maximize your wealth-building potential? Was that the thing he was laying out? Yes. Yeah, I heard HELOC. To jump right into using your HELOC to build your wealth means you're jeopardizing your shelter, your house that you live in.

3:32And that's assuming you even have a house. If you have a low interest rate and you got in pre-2020, then you've already kind of won a lot of the housing parts of it. Let's not go lever that up to your eyeballs so that you can then get yourself and jeopardize this great opportunity or thing that you have. I want a place where I sleep, but I can also say my dad has made every financial mistake under the sun. He's done this. He put out money from his he-lock to go invest. He put it in the stock market. I mean, he had some times where it was in early 2020, so it did well, or early 2000s. Let's get our decade right.

4:10But I mean, he also did it once to invest in an IPO and it went kaput. So I don't recommend it. I wouldn't jeopardize my shelter. It's all about risk. How much risk do you really want to take? And is the reward that you might potentially receive worth the risk that you're taking on? And I would argue that risking losing your home, losing your shelter just is not worth it. Hey, I'm in a good mood, though. Can let's just celebrate that he wasn't talking about buying a car with your home equity. That's true. He was at least investing it. You look happier. Thanks. I've been spending beyond my means.

4:46I think people are still living on this with their credit cards, but no, don't. Don't do that. Just go boost your income. You are crazy if you think that the way you are going to get rich is from making the money that you have right now and just investing it in the stock market. That's insane. Why? Because what you are actually doing is you're just letting other people get rich. Who gets really rich? The asset managers who manage your money, the banks that hold your capital. Why do they get rich instead of you? Because what do they do? They take your money and they do something with it proactively.

5:15So they take your money and they take real risk with it. And I think unless you take risk with your money, but also with yourself, you're never going to get wealthy. And so you and I could go very viral on the internet every single day if we talked about how to invest your first$10 ,000 to get to$100 ,000. You could get a lot of views on that, except it's totally pointless. And if what we really want to do is elevate people to real wealth, where they have enough money for all the things that they want in life. It's not done through investing. It is done through earning. That is the only way you make real money.

5:47Once you make real money, you can make more of it through investing. But in the beginning, you got to earn. That's it. Okay. There were glimmers of truth in the thing that she said, but man, she was kind of wandering around in the woods. I want to say the very first thing. What she said is, if you are investing money, you're not making money. Someone else is making money. That's true if all you're doing is parking your money in a bank. And we do see people do that. They put money in a savings account, in a checking account. Well, the bank then goes and lends that money out, takes on risk, gets a rate of return.

6:14That's true. But that's not the way that investing works. She's way off on the way investing actually works. Yeah, if you're broke as a joke, she's right. You have to sell your time for wages or earnings or go start a business or something. And then hopefully if you live on less than you make, you can turn that into wealth over the long term. But more than likely, you're going to want to invest the money so it can start working harder than you do with your brain and your hands. And I like index investment funds. I mean, because then you're instead of trying to beat the market, you are the market.

6:44And all this great innovation that we see around us, you capitalize off of that. Making your money, growing your income, that's going to be the best thing you can do. But put it in the market, let investment compounding take over. Because otherwise, you're never going to be able to retire. That is how 99 % of the people make it. This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome, that's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50-page restoration block, or finally break down that long article you've had open for weeks.

7:17Gemini and Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses set up required compatibility and availability varies 18+. I don't know if people ask me all the time what they should study in college. Now, we can come back to this. What they're asking is how do they make a lot of money? because they are terrified about the impending affordability crisis. And I feel like I now have to just remind everyone that like the reason we're at an affordability crisis is not that we can't do things inexpensively, it's that we choose not to. It's not a technological failure that we have prohibitively expensive housing, prohibitively expensive health care, prohibitively expensive education.

7:49It's a policy failure. And we need to put incredible pressure on policymakers to fix that. But when I tell kids that, then I say, I also have bad news, which is what you study doesn't matter. There is a very low likelihood that your major will define your economic outcome unless you study math at Harvard or Stanford. And if you're going to go to a random college, you know, pick a place on the map, then you're going to study anything. Study something you love. Study something that you are willing to be excited about, not because that thing will get you a good job, but because that thing is intrinsically exciting to you so that you can taste mastery, which is not something we ever challenge high schoolers to experience.

8:23Or not often, I should say. Only if you're an elite athlete or only if you're an elite student, do you really taste what it is like to work very, very hard in pursuit of getting better? I disliked about everything they said. I was on a roller coaster. I was with him and then I was not with him. And then I was with him and then I was not with him. I'm going to be generous here because I am in a career field that did not exist when I was in high school, when I was in college. And I didn't know where I was going to end up. So I've been out of high school 21 years now. So I don't think you're defined by the major you get.

8:55Granted, I went to school for business and then ultimately finance. But I do think it's important you like what you do. So you do kind of approach it with a passion. But with that said, like liberal arts versus engineering or liberal arts versus nursing, there's a big difference. He started this thing as he basically wanted to empower the mob. He told us everything we all want to hear. Hey, it's not your fault. It's the government's fault. and that's the stuff that is going to put you in a situation where you don't feel like you have control in this world we live in. And yeah, there are things like housing and cost of education, for sure, that are way more expensive than they should be.

9:33But I'm also here to tell you that we are living the greatest time to build wealth right now. Yeah. I think if all you do is follow your passion, you're going to find yourself in the same affordability crisis he's talking about, where holy cow, I went and got this degree. I racked up tens of thousands, if not hundreds of thousands of debt for a job that I couldn't find, that couldn't pay me what I thought I was going to earn or what would justify the degree that I got. And now because I'm in this passionate, low pay job, now I can't afford a house either. And so it's this vicious cycle that is going to repeat itself if you carry out his advice exactly the way that he said.

10:08I have a flip for that. You should find what you love about the job you have. There you go. And go into engineering, finance, or accounting. Yes. Reasons you shouldn't feel guilty about spending money It's your money, isn't it? That's the first reason and I I would say that that means that you can spend that how you want to without guilt What's your future self think? Tina, what's the rest of money? That's it. There are loads of things to buy aren't there? Spend money on other people all the time, so why not spend a little bit of moolah on yourself, eh? you deserve it and that's why the next slide says you deserve it because you do you do we know you do come on was that really the video i agree a hundred percent i agree with this full stop everything he said after you save 25 percent of your gross income for your future self once you do that agreed totally go spend do all the things you deserve it you put in the hard work after you save a little bit of day for tomorrow.

11:10I would make one comment on the slide. There's loads of stuff to buy. Most of us are buying way more stuff than we need. And I just, I hate clutter. We don't need as much stuff as we have. So I'm sitting here. Look, I'm the old guy sitting amongst you younger folks. We agree. Yeah. I hear that there's this new phenomenon where people get adult beverages and then make PowerPoint presentations for their friends. And like, is that what I just witnessed? If that was presented at a content meeting, I'd be like, how did this guy make it through the hiring phase? I don't think this is a thing. What young people are you hanging out with?

11:44This is a thing. Are you so old you don't know this stuff either? I'm just saying I don't think it's a thing. I don't think the younger generation is using PowerPoints. Look, I can see you, but she's saying it's a thing. This is not a thing. I hang out with people all the time. I've not seen one PowerPoint socially. It's not a social thing that we do. You work at Taco Bell and have some extra cash lying around. Here's what not to do. Your friend tracks the stocks of different companies and tries to find the perfect time to invest. He sometimes makes money, he sometimes loses money, but in the long run he goes broke because it's impossible to time the market.

12:17But you make a smarter choice. You take your extra money and put some into a high yield savings account and the rest into index funds. These funds split your money across tons of different stocks which gives you diversification and lower risk. You stop your friend's nonsense and make him follow GoHart. That was great. I love it. I mean, I want to see the setup. I wish it was like a third camera that kind of showed you all the props and how he kind of did that. Have you ever seen those kind of setup videos? I love that stuff. Matt Dave Elliott does that. I have no notes. And I think most young people screw this up.

12:47They start trying to either pick stocks or do sports betting or go participate in Calashire, whatever the thing may be to try to get some edge to go try to beat the market. When if you will just do it the way that he described, it's almost inevitable to build wealth that way. Be the market. Don't try to beat the market. I like the index funds. Recently, Business Insider did a video boldly titled don't retire early. I recognize that voice. No surprise with the most common advice that we tend to hear is that you need to start saving for your future when you're younger. Start as early as possible.

13:24And I know in the financial space, maybe it sounds like we're beating a dead horse when we repeatedly say, take a portion of every single paycheck, whether it's$50 or 10 % of your pay or 20 % of your pay, and just set it aside, put it in investments and let it grow for your future. but we have to say it because common sense isn't always common practice and a lot of times young people have the attitude of i'll just get to it eventually i'll save when i make more i don't have room in my budget right now but so often we end up putting things off too long and then someday comes way quicker than we ever imagined she's great i love her it was it was great i again i I have no notes because I think far too often people want to save what's left over after they've spent.

14:14And if you practice that, then you're never going to have anything to save. That's why we want people to pay yourself first, save first, put the money in first, and then spend what's left over and you'll find yourself in a much better position. Erin, that B-roll, is that you or did you find that B-roll of stuffing in the dollars? Oh, that's me. That's what I'm doing, hanging out in the kitchen. We've all been there. We have so many dollar bills that we're trying to stuff in and the zipper gets in the way. that was really that was we love your content I think you can tell if people want to know more about what you create including that video where can they go check you out I'm here on YouTube Aaron Talks Money that's the only place I am I'm not on Facebook or Instagram don't go there we believe there's a better way to do money and that's why we always load you up if you want to go check it out moneyguy.com slash resources go ahead and start this journey we'll give you as much free stuff as we can and build your great big beautiful tomorrow.

15:07I'm your host, Brian, joined by Beau, joined by Aaron. Money Guy, out.