How Humphrey Yang Built His Wealth

24:18And there was a guy, and you're going to tell me the name, because I never remember his name, who was the early influencer. Casey Neistat. Casey Neistat. I never can remember names. I'm the opposite of Humphrey, because he remembers everybody's names. Casey, his whole thing was once he started making big money, he realized how empty it is. I know that if you're broke right now, you're like, shut up with this stuff. I hate it when rich people tell me it's horrible to have all this money. No, but I'm telling you, there is a balance there from, yes, cover your basics, do the responsible discipline thing.

24:51But there is a thing where you squander what life is meant to be if all you do is hoard it in the background. That's why I say there's a fine line between financial mutant and a financial miser. because what Casey was saying is he got to the top of the mountain and realized, oh, my gosh, it's so empty here that I haven't built to put enough life in this, that he was running and screaming from the mountaintops, go back, go back and go do more stuff. And I think that that's the thing I would tell you, Bianca. I don't want you to be in your 50s and go, what was I doing? Yes, I'm wealthy, I'm loaded, but I'm not in my 20s anymore.

25:28I'm not going to be in my 30s, and I'm going to miss out on a lot of life. So I enjoy every age and decade you're in, bedazzle your basic life so that you have just a life of no regret. I also think that she's doing really good. Oh, she's crushing it. Investing 25%. Crushing it. Yeah, saving 25%. But that's why we can also tell her it's okay because I have so many people, and I know you do in your audience too, Humphrey, that they're hard on themselves. They need somebody to kind of coach them and say it's okay. Hey, you know, a lot of we were picking on financial advisors earlier. Another thing I think we as financial advisors, we do a lot of people think we're the Susie Ormans.

26:08I'm aging myself by saying that because her shows were no, no, no. It's just the opposite. We are constantly telling people, go do this, go do more, go live your best life. It's because sometimes you financial mutants are the hardest on yourself and you need somebody out there giving you perspective and context saying, go enjoy your life. Money is nothing more than a tool that allows us to accomplish the goals that we have. But I think so often we forget not all goals have to be 40 years down the road. Not all goals have to be 20 years down the road. It's okay if one of your goals, Bianca, is to fly in an airplane and go on a trip somewhere if you use the money that you have right now to help you accomplish that.

26:50And so one of the things I tell all people to do is, hey, list what all your goals are, both a long-term, intermediate term, and then short-term. Prioritize how important they are, and then make sure your dollars align with that priority. Because if just having a big stack of money at the end of your life is your only goal, then yeah, throw everything at that. But if you have other goals that are not that, it's okay to deploy and use your dollars to accomplish those things. We only get one spin on this thing, so you might as well make the most of it while you're here. I do want to, this isn't part of the question, but Humphrey, I have to ask since we've got you sitting here.

27:25Bo and I are knuckleheads. We went through this whole phase where we even did this thing called Tightwad Nation because I mean I was tight as of tight. I mean I resembled a lot of Bianca of you know just the way I've lived my life but I have but I have is I've gotten more success. I've eventually traded in my tightwad card because I have realized I spend more money on stuff and I felt like I was a hypocrite and I have a no hypocrite policy. Yeah. Because you're in that stage you've obviously very successful but you come from a background where even you said your childhood, you were taught to save it, build it.

27:58What's your journey like? Have you felt an evolution with how you've looked at money? I think he's asking, were you a tight wad? Are you a tight wad? Thank you for speaking to me. And then what are you now? Yeah, I think I still err on the side of tight wad, but I am not opposed to spending money on experiences now because I think they bring you a lot of joy and fulfillment. Just even running the marathon on Sunday, I stayed in a nice hotel that was close to the start line because I didn't want to walk a mile to the start line. I will run 26.2 and not walk a foot further. Exactly. I respect that.

28:31Yeah. So I've become more abundant with at least the spending habits. I mean, my father passed away this year, but he passed away with more money than he should have. And he never enjoyed his life. Towards the end of his life, he was still eating frozen meals because that's what he was used to. He just got conditioned himself. He got conditioned to himself. And he still wanted to fly economy even though he didn't have to. And so I kind of looked at his life and I said, okay, how can I change my habits so that I at least enjoy a little bit of the money, but still, you know, have some money for later and perhaps have some money for my future family.

29:05I love that. Yeah. Love that. But your parents got to see all your success, though? Oh, yeah, yeah. My mom's still kicking it, so she's good. She's good. She's not a tightwad. Okay. She likes to spend the money. Good for her. She's like, budget? What's that? Yeah. So, you know, I also grew up, you know, with a mom. I was like, oh, what's a budget? And then my dad's like, no, don't spend any money. So I got a really good balance. A really good balance of like, okay, what's right and what's not right here. Yeah, so that's awesome. That's great. Well, Bianca, great question. Thank you so much. I will say, Bianca, you're in this live stream.

29:37You're saving 25%. A lot of people can't like, or it takes a while for people to get those basics down. So I love that you're already there. and I think what the guys shared about potentially looking at your goals differently and doing those experiences was amazing. And go grab that download, moneyguy.com slash resources. How much did you save? My kids, they want to go on a trip where we fly. They don't care where we go. They just want the experience, yeah. So I literally thought about what's the cheapest plane ticket that I could buy, like my whole family, to just fly to a city, you know, like Sheboygan, Wisconsin or whatever.

30:15It's probably Miami. And then, Miami flights are cheap for some reason. Really? I don't know why they're so cheap. Can you imagine me pitching my wife on this? Hey, sweetheart, we're going to fly. All five of us down to Miami. As soon as we get there, we're just going to turn around and come right on back. No, because the hotels are not cheap in Miami. You guys are funny. Uncovered windows can make your home feel up to 20 degrees hotter. Stay cool and save up to 50 % off custom window treatments during the 4th of July mega sale at blinds.com from outdoor shades to room darkening blinds finding the perfect fit is easy get free samples expert design help and professional measure and install services or DIY with confidence and support every step of the way shop up to 50 % off site-wide plus huge savings on doorbusters right now during the 4th of July mega sale at blinds.com you want to get your backyard summer ready but you don't want to break the bank?

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32:01There it is What do you think? This was interesting. I don't know where we're all going to land on this one. Oh, man. Yeah, this is—Derek's going to stir the pot. Since you're our guest, we're going to let you take this one first. Young 30, all VU, all equity. Is that okay? So I would question the target date retirement fund because if I'm not mistaken, you guys have to correct me here, usually a target date retirement fund, when you are 30, is like 90 % VU anyway, right? Nailed it. It's 90 % S &P 500, 90 % market. VOO has 500 and change stocks in it anyway, so I've always viewed that as pretty diversified.

32:38But I would like to hear your take on if you would add more bonds or fixed income into that portfolio as an early 30-something. It depends on his goals too, right? I'm not sure. I'm willing to go first, but I'll let you know. Look, Bo and I have even debated this, and I'm going to let him kind of have the word on it I tried to craft some rules where I was like, 20-somethings, yeah, just go buy Total Market or S &P 500. I think that those index funds are so strong. But Bo's going to get into the behavioral stuff that goes with why we say index target retirement funds is because, look, we know in the beginning, it's just the behavior of starting the saving and investing.

33:20because there's such a battle of consumption out there for 20-somethings that people just don't even start the habit of building 10 % or 15 % savings rates. So the fact that we're even at this discussion of having, is it okay to do just index funds versus index target retirement funds? You're so ahead of the masses on this because most people don't even have the discipline to get that far. But I'm never going to beat up because we even gave advice. I had a studio tour who came through and I found out that they, because they asked the same question. Their index target retirement fund was 10 % bonds.

33:53And they were, do you remember how old they were, Bo? They were 26 years old. And I was like, well, look, there's in the Roth accounts, buy VU or buy the total market VTI or whatever you want. And then that way it's going to bring your total allocation to probably a 3 % to 5 % bonds, which now you're not going to lose as much sleep about. So you can even balance it out. But I'm not going to pick on you either way. I bet a financial mutant who's asking in their 20s or even early 30s these two questions, you're going to come out a winner, both sides. So we're now getting into the – we're splitting hairs.

34:33Well, I think that when it comes to the advice that we give, we want to probabilistically set you up for success. We know that a lot of success in finance is based more on behavior than is based on actual mathematics, right? And so I'm going to do this little exercise really quick. This will seem unkind. It's not. Humphrey, at what age did you turn old? His response, oh, I'm not old. Yeah, I'm not old. So, Brian, at what age did you turn old? And you're going to say, oh, I'm not old. Well, no, I'm going to say 50 kicks. It's like a donkey. I don't feel bad, but it's just that everybody looks at you different once you tell them you're in your 50s.

35:12Here's the reason why I asked that question. I would imagine what she says, hey, I'm not old yet. I mean, maybe I might be old 10 years. and so we all subjectively assign, oh, I'm still young. I'm still aggressive. I can still, my risk tolerance is still, my stuff. And so one of the problems I see with folks in their, in their twenties, their vu for life, and they get really used to 12, 13, 14 % annualized returns because that's when they came through. And then in their thirties, they keep doing the same thing and the numbers get bigger. And the bigger the numbers get, the bigger the numbers get.

35:39And so then they carry that into their forties. Well, I'm still young in forties. I got 25 working years, I can still be 100 % equities. Well, then you get to your 50s. Gosh, I'm not retiring yet. And you end up to where while there should likely be a glide path, it never actually happens. And so it's not uncommon. Brian and I, we used to sit down with prospects and they'd sit down with us and they'd be 65, ready to retire. We look at their portfolio and say, you've got 97 % equities and 3%. And so then we show them, hey, we do an analysis. Here's your current portfolio today. and here's what we're recommending.

36:11They're like, guys, I've been annualizing 15 % per year, and you're going to put me in something where I'm only going to make 7%, 8 % per year. And it's a really hard adjustment to make. And then what happens? 2008 happens. And then you have fourth quarter of 2018, you have COVID, you have 2022, and there's these significant downturns. And you really do suffer from a very real sequence of return risk in those early years of retirement, in early years of financial independence. And so if we can build the behavior early on that diversification is not bad, taking some risk off the table is not bad, having a healthy savings rate that can maybe compensate for me not getting the absolute best return possible every single year is not bad.

36:54Because when it comes to investing, when it comes to building wealth, it's more about how much you get to keep over the long term than how much you make this month, this quarter, this year. And so if we can set that behavior, and I think the 30s is a great time to start thinking about that, I don't think that's going to be a bad thing. I want to give some context of, I think when you're in your 20s and 30s, and I'm going to make a plain analogy. We'll bring your fighter pilot in here too. In your 20s and 30s, you can put up with a lot. You just have the tolerance. You can do it. I've made the joke all the time is that it seemed reasonable to go on a trip and put 10 guys in one hotel room in my 20s.

37:33Now, if I don't have an en suite, I'm like, what are we doing here? It's funny how your life will change. And I think about all my people who are vu for life or some semblance of I'm just going to be just wild with the aggressiveness all the way up until I retire. It is the analogy. That's why I like the glide path because you're landing an airplane of life. Can you imagine if you're on a commercial flight and they are flying you in and then all of a sudden they tell you, okay, we're quickly approaching San Francisco airport. And then they dive on that thing. Turn off the engine. They circle it in and then skid it in, and you'd be like, oh, my God, the trauma you would have would probably make it where you'd never want to fly on an airplane again is because, yeah, they got you in, but there was a lot of drama and a lot of things that really impacted you.

38:20Whereas I'm telling you, as you're, as a person, going to change. Your life is going to change. Success is going to change you. You're going to be – you want a nice, smooth, commercial-type landing where the pilot is slowly pulling it down to where when you touch it, you go, wow, what a great landing. That was so smooth. That felt so good. And you have no trauma that you took with you. If you had a meeting the next morning, you didn't even sleep the night because it was just so traumatic how this thing blew up around you. and you are, that's what people do to themselves with investing. That's why people like your father say, I don't want any risk.

38:55It's because they're doing it wrong. I mean, if you have to go to where you're just taking all these risks and then it hurts, you didn't do it right. Because a good diversified portfolio should serve you well when you're young and aggressive, and then it should serve you well when you get old and you're starting to dial down the risk. Yeah, I want to add one more. And I actually have a question for you guys. Recently, the stock market's been phenomenal, right? And so that's kind of what we're used to right now. Well, 80 % of the time, it's phenomenal. And I'm thinking about those downturns that you're talking about right now.

39:24And right now, I have one individual stock position that's up 5, 6x, right? And I don't want to sell it because I don't want to take these capital gains hits. What would you guys say to someone like me who has a lot of short-term capital gains? And maybe they're becoming long-term soon, but I don't want to take the tax hit. Yeah, it's a really hard thing because when it comes to stock investment, I learned this very early on in my very first investments class. They say when it comes to buying individual stocks, you don't have to make two decisions really, really well. You've got to buy at the right time, and you've got to sell at the right time.

39:55And oftentimes, it's that second one that's really, really difficult. So whenever we have a client who comes to us and says, hey, I've got this one stock position, I've made 1 ,000%, or I've gone 5X on it or whatever. So, okay, what would be more painful to you right now? If you're at 5X and we saw this really bad downturn, and all of a sudden it went to where you were only up 2X. and so you lost out on that. Is that more painful? Or what if you sold it today and you sold it 5X and it didn't go to 10X? And we'll ask that question. And so then a lot of times we'll ask them, which one of those is more painful for you?

40:26Okay, that's gonna tell me where your bent is in terms of holding it or getting out of it. And once we do decide, okay, maybe it makes sense for us to begin divesting out of this position, well, then comes the how. Well, if I think it's at all time high right now, do I just sell that chunk today? Or do I wanna remove emotion from the equation and say, okay, every month I'm going to sell this percent, or I'm going to sell every quarter, I'm going to sell this many shares. Just like I dollar cost average into position, I can dollar cost average out to try to remove it. If the stock goes up, great.

40:54I've still got holdings that are making money. If it goes down, it's okay. I took some of my chips off the table. And you can approach it that way, because what we want to prevent people from doing is being emotional and making this like knee-jerk reaction that, again, changes the way their behavior happens in the future. Gotcha. you i would you know i'm gonna make this personal because personal finance is very personal oh boy you you were successful i imagine this thing even though it's up fivefold it's probably a small percentage of your total net worth you might get benefit because i i have i have one holding that i'm so proud because look i did the same thing i bought apple in 2008 and i talk about this in millionaire mission i sold it after it doubled or tripled meanwhile i have a childhood best friend who he bought it.

41:37He still owns those shares. Yeah, from 2008. Holy cow, what those shares are worth. It is literally one of those stories where you hear people say, you know, if you bought$1 ,000 worth of Amazon, it turns into a million bucks. Nobody does that. There's a few people that do unique things like that. That's why I highlighted it in the book. But I'm like everybody else. I sold Apple after I made two or three fold when I bought it in 2008. Well, I got another lick that I hit in 2018. I bought a stock. and now I've just decided it's part of my permanent portfolio. I'm just now it's fun for me. Even though this thing, I really think this thing is well, I mean, I'm at the path where this one purchase is going to be worth seven figures off of this one thing and I'm going to see if he'll do it.

42:23I just want to see it. So it's kind of a fun conversation piece, but it's such a small percentage of my total net worth. It just doesn't matter. So for me, and I think for you, you could just, if it's fun for you, keep that. But if this was, we have people come to us all the time, even with like an NVIDIA, where this is, but they worked for NVIDIA. And this is like now 80 % of their net worth. I don't care how good a company is. We have to divest you of this so that you don't have the lucent stories and all these other things that I constantly give experience shares on. So for somebody like that, then you have to get out of these investments to make sure it's more balanced from a risk goal perspective.

43:04But for you, I think, because do you know how many conversations I get to have about this stock that I bought in 2018, and now it's going to potentially be seven figures at some point? I mean, that's a fun little conversation. That's a little sweetener of life that you get to share. But you can do it, depending on how you acquired it. There are ways to be sophisticated in how you dispose of it. You can do charitable giving with appreciated securities. You can do loss, gain matching to loss harvesting to try to offset it. You can sell specific lots depending on how you bought that. So just because you make the decision to exit a position doesn't mean you have to take on a big tax hit.

43:39There are ways to get around that, or at least to minimize that to the best of your ability. And I even detailed, and I feel like I'm giving a plug for Millionaire Mission, which I am. My giving strategy uses a lot of appreciated holdings, where I will dollar-cost average into my same joint account kind of what I'm giving to the churches and other things, because it's just, it's a really cool thing when you get to give those appreciated holdings and then push up the basis. It's fun. Cool. Can I tell you another behavioral thing I think that I think is just wild that people do sometimes, and I bet some of you financial mutants do this.

44:16Say I bought Apple in 2008, right? And or whatever. And say I bought$10 ,000 of it and it's worth 20 ,000 now. I always tell people, hey, if you're, if you're charitably inclined, you're someone who wants to like give to charity, Why would you not give that appreciation? But I bought it in 2008. I can't go back. I was like, no, no, no. You realize right now today you have$20 ,000 of exposure. If you gift that$20 ,000 of Apple to the charitable giving account, and you go buy Apple today to$20 ,000, you still have the exact same investment exposure that you had from that stock you bought back in 2008.

44:48You just eradicate the gains. I'm amazed at how many people not only are anchored to the stock that they bought, they are anchored to the day that they bought that. And that is a fallacy because you don't want those gains. You want to get rid of those out of your portfolio. So even if you have a position you love and you're thinking, oh, I would never get rid of this fill in the blank. No, think about getting it. You can always just go rebuy it today and reset your basis. Cool. That's a really good tip slash hack. I love that. Slash tax tip. Anything you want to call it. Let's just come up with it.

45:21We can just come up with all kind of little things. No, that's great. Okay, I've got another question queued up for you. This one's a little, I don't know. I'm interested to hear what you're going to say. Oh, boy. A little spicy, maybe. Maybe. You see. No, I will not. You be the judge. Do that. You be the judge. It says, Sing Sign Speak says, I have low interest student loans from my parents. I'll be 24 when I graduate. So how should I balance my investing and paying them off to preserve the relationship? Does this person mean that the parents loaned this person the money? That's how I read it, yes.

45:57So it is true. There's like a mathematical component here. There's also a relational component. So I'd love to hear your thoughts. I think I'll start with this one as you guys are gathering your thoughts. I think this sing sign, this is what I would say. Mom, Dad, I love you guys. But I went to moneyguy.com slash resources, and I downloaded the Financial Order of Operations Deliverable. It's a free copy. It's a nine-step process of what I should do with my next dollar. And because I listen to these guys, because I listen to Humphrey Yang, this says right here that I should not begin paying off low-interest debt until step nine, Mom and Dad.

46:37So, like, I'd love, but Mom, Dad, I haven't, I've done my emergency. I've got to max out my Roth. I've got to max out my HSA. I've got to max out my retirement. I've got to be a high percent. I'm just not there yet. But, Mom and Dad, as soon as I get there, you are number nine on the list. I think that's the way. I think that'll work. I have thoughts, but I want to hear Humphrey's thoughts first. I do too. I guess my thought would be it depends on how fragile the relationship is. If it's something that's really important to your parents, maybe set up a little payment plan where monthly you spend a small portion of your income, not a large portion, very small.

47:13We're talking$100 a month maybe where it goes back to paying your parents off. And then maybe you can slowly amp that up over time. But I do agree with you that it should be lower on the priority list of paying off the low interest rate debt. Because there are a lot of better things you can do with that money. But it depends on your parents. Like if they're hounding you every month and like, hey, where's my payment? We need that money. Where's my money? Yeah, I noticed there wasn't anything about if there was an expectation set in this question. So like have you already committed to something?

47:44Like have they let you know? I don't know. That's probably a conversation that just needs to happen. How low interest is this debt? Maybe we just refinance at a higher rate with mom and dad. Mom, dad, you gave me this at 2%. What if we refinance at 5 %? I will give the old man answer here because I'm the only one on this panel that has a 22-year-old daughter. Can I tell you one of the funnest things about being a parent is if you see your children model really good behavior, like critical thinking skills. So if your parents had the ability to where they were able to essentially fund college with a low-interest loan, this is ripe, fertile ground to have a conversation.

48:23That's the first thing I do is if you have a good relationship, is have a great conversation with your parents about exactly what Bo set up, is that, hey, I'm starting out. I want to do my Roth IRA. I want to do this. But also I feel this obligation because you guys have paid it forward to me to have this education. I would love to figure out the balance. If you just have that conversation, do you know the tingle factor your parents will have? I would be like, yes, this is what I'm talking about. It's connecting everything I've done. And then I would say to your parents, I want to do something.

48:56Even though I know that this is a step nine of the financial order of operations, I believe it is so important for me to model. I don't know if it's$50 a month,$100 a month. I want you guys, for you to see it as me honoring this gift that y 'all have done and the investments you made. But I'm also, I want you to know why it's so low in these beginning stages. is more of a trophy or a token contribution to thank you for the gift, but then I'm still going to fund my Roth, my 401K, and all these other things. And I guarantee, because I know I've shared, I want another plug for the book. I don't mean to plug in this, but it's just I put all these stories in the book.

49:36Because I was on the other side of this, is that I remember when I got into my adult life, I realized very quickly how hard it was to be an adult. and I got myself in some credit card debt and I had to call my dad and it was only like$300, but it crushed me to have to call my parents to ask. And I remember when it was time when I called them back to say, hey, I'm ready to pay you back. They're like, no, no, no, don't worry about it. You know, they're like, no, no, no. This is a principled moment. And I think if you could have those conversations with your parents, because they made an investment in you and have a principled conversation, use this as a tool.

50:08Man, the tingles I get just thinking about that as a parent, you will make their year because they'll start to see, man, it took the graph of what I was trying to imprint and share with the next generation. Because we know the stats. Every time we do the wealth studies and it comes from Millionaire Next Door, Ramsey and them and all theirs, and we've done 25 ,000 even in our own interviews of all the financial mutants, 70 % to 80 % of millionaires are first generation. so that stat only exists if we know the stats that you know between 70 percent disappears in generation two 90 percent by generation three so if your parents if they were had the abilities to pay it forward and now you're actually breaking the trend that creates those stats that we all cite they're they're gonna they're gonna be very excited about that good answer that was great no honestly that was a good uh variety of thoughts all right i've got another question queued up for you from Makula.

51:09It says, how often does Humphrey rebalance his portfolio? Any differences between what the money guys recommend? I'll take this question. How does Humphrey rebalance his portfolio? Honestly, not enough. For someone who makes content on YouTube a lot about personal finance, I admittedly have not rebalanced it in a couple of years. So I should rebalance it this year, probably at the end of this year. Ideally, I would be doing it once a year, but I'd love to hear your take. Yeah. So we, I'll tell you the way that I think about this. One of the things I do is because I'm a contributor accumulator, I like to think about as I'm making contributions, I'm kind of naturally rebalancing in terms of the asset cloud.

51:50I mean, most of it's at an autopilot, but every now and then I might just kind of do like a manual override. Hey, I need more small cap or I need more international, whatever, whatever that thing may be. for our clients, what we generally target is we want to look at rebalancing generally twice a year, right? And there's no, there's no science of that, but what we do is we review it. It doesn't mean that we actually place rebalances, but we want to review the allocation with the eye towards rebalancing. And a lot of times it might be, okay, hey, our large cap target is 47 % and you're at 48.2.

52:19Yeah, we're not going to rebalance that. We're going to, we're going to allow that to be in an acceptable range, but we've at least investigated, right? And then when the market gives us opportunities, we want to make sure that we take advantage of those opportunities. So a lot of people don't recognize that in 2025, this has been a fantastic investment year. It's been a great year for investors. In April, we were down like 19 % off the high. So if you were someone who was recently buying or you've recently allocated some dollars, there was a good chance that you had a huge opportunity right there in April of this year to do some loss harvesting, to do some rebalancing, to allocate your dollars in a different way where you could take advantage of that.

52:57Now, that's not timing the market. That's being tactical in how you think about your rebalancing. So we look for, in just a normal, boring year, looking at it twice a year, but in years where we do see those big intra-declines, we want to be kind of like dialed in. Is now a good time for us to get back to target or make some tweaks that we maybe have not made. I'm willing to be confessional and tell you that I do a better job and I know all of our advisors here do a better job with rebalancing than I do for myself is because it's part of our direct process will what we do for clients. For myself, I will say because I have a no hypocrisy policy.

53:35I like to be transparent with you guys. It's once a year because I do my annual net worth statement once a year. I do charitable giving, you know, off of appreciated holdings that I have and so forth. So those things naturally create when I do the net worth statement. And then also when I'm doing my, just truing up my angle giving, um, I, those are perfect rebalancing opportunities for me to kind of think about it and those create those. So I am doing it, but I'm not doing it as much as if I was a client of the firm. I'm just being confessional about that. But, but I think that's, but it's once a year would be my answer.

54:05Love that. Well, you guys have inspired me for sure. I should probably, I should probably rebalance it. There was a lot of alignment on that one, honestly. Well, create a process. I mean, everything in my life is try to create a system or a process. It's probably why we came up with financial order of operations. It's because I just love thinking about money in a methodical way. So it really makes the good habits that much easier and the bad habits that much harder. Because human nature is we let our emotions and all these other things come into play. So if we can create a system that takes all that out, even if you're not doing it as well as you could, it's still getting done.

54:37Now, a brief aside, only because I think from an investment perspective, this is an interesting thought process to go down. So when you rebalance, you're really making two decisions. I'm making the decision to sell something and to buy something else. Well, we believe as investors, oftentimes momentum is a real thing that happens in the markets. There are markets that momentum will carry an asset class on. So I'll use the large cap example again. It is not uncommon for us to look at a rebalance. Okay, this is supposed to be 47%. it's at 48%. If I were to sell that 1%, is there something else in the portfolio that's compelling right now for me to buy?

55:13Or if there's nothing compelling for me to buy, I might be okay allowing my portfolio to drift a touch. Now, this is where there's a little bit more of an art there than a science, but I don't want people to get so dogmatic and rebalancing. They think, okay, I've got to place trades today. Because a lot of times, a lot of custodians, depending on the funds, there might be charges. It might not be an inexpensive thing to rebalance. And so I don't want to see you like, I'm selling$7 of this. I'm going to go buy four, three, and$1 of this. That math doesn't math. But I want to make sure that when you make a financial decision, when you make a decision in your portfolio, there's a reason you're making it.

55:51You're not just making it for the motion of it. I get upset. I'm not going to name names. No, name them. Asset location is important because when we do asset allocation, obviously in your retirement accounts, you'll put your fixed income because they're taxed a certain way. And then in your Roth accounts, you'll put growth assets. So we'll do asset location within different account structures. And there is a custodian that does, because we work with clients who might work with a custodian or an employer that gives them advisors for free and they take that as an executive benefit. And we have these custodians that we're like, no, no.

56:28in this retirement account, we want this allocation. And they're like, no, no, our fiduciary responsibility won't allow us. We have to, and we're like, oh my God, you knuckleheads. So this is why sometimes as financial planners, you have to be careful with being too dogmatic where it needs to be more practical of what's the total plan, what's the why, how does it fit into the personal finance situation. Because a lot of these people, it makes me break my system that I just said is because they'll create a system that's a system for the sake of being a system without really thinking about the whole picture.

57:00I agree with both of you. I think you've got to really think for yourself, too, and not just follow a rule because someone on the Internet told you to. That's coming from three guys on the Internet right now. You know it's true. So, yeah, make sure it fits you and personal finance is personal, as you guys said earlier. So tune in next week when we're going to live rebalance Humphrey's portfolio. well I like you kind of threw in there that you at least look at it you don't always have to do the thing I think that's a great point do you share your numbers because I mean we take some flack I don't share my income I don't share my net worth completely I'm not so transparent I stopped sharing some people do some people do share it all y 'all don't have relatives I had people coming up to me like oh how's your palantir position doing I don't really want this.

57:51Yeah. That's funny. All right. I've got another one queued up from Mr. Quest. It says, Can you be too diversified with individual stocks? I'll hear a new stock and invest in it, but feel like my money's spread too thin. Would it be better to focus on a few strong stocks instead of many? I've got very strong feelings. We're going to let Humphrey say. I knew you guys would. I've watched enough of Humphrey's content. I know we're going to differ a little bit. I think if it's held within a Roth account, I'm loving the few strong stocks instead of many. But I think I have more of an aggressive approach to things.

58:34I don't know how many individual stocks this person has, but I do think that if you're going to be diversified with like 60 individual stocks, you might as well just buy an ETF at that point. I love that. I love that so much. That's my take. I personally like to have a few strong stocks in my Roth IRA in addition to an index fund, and I like the aggressive approach that I take and the fact that, oh, maybe I can have a lot of tax-free gains, but that's personally what I do. Would I say that that's what everyone should do? Probably not. I think, again, at the beginning of this live stream, I said it's probably better to just set it and forget it and not look at it.

59:14It probably would have been way better off. right so what do you think of how he said i'll hear a new stock and then invest in that's i know brian and bo are going to say something about it so i'm curious what you think about that yeah i think that you should probably be doing at least 30 hours of research before you buy a new stock just don't you know if your mom says to buy buy a new stock you just go for it just know what he hears about oh i heard that this would make 20 last year i need to buy that right I don't know if that's the way that I base my investment decision making. Okay. I'm just going to say, I don't love individual stocks because, look, here's the reality of the situation.

59:55When you start having some success and then you start having a growing family, time is just something I don't have a lot of anymore. So to hear Humphrey say you've got to invest 30 hours to buy one stock, I would end up with just a portfolio of cash. because I don't have 30 hours to go find the next stock to do it. So I have to create things, the behaviors that will force it. And that's what I always, like I said, I just hung out with a buddy of mine who moved back to Chicago. And we were talking, he's like, man, I am so much better off since you got me buying index funds. He goes, because he was, we'd sit on his back porch and he'd be, because when people find out you do finance, they think that the first thing, what stock are you doing?

1:00:39I don't know. I'm buying an S &P. I'm buying an index fund for myself. And so he would tell me, I remember we used to have so many conversations about Fitbit and all these other things. And finally, I was like, what are you doing? I mean, you're successful. You're doing all these things. Just buy the index fund. When we were on this trip recently, he was like, you know, I'm so much better off. He goes, when I look at how my index funds are performing, and I don't have to put any effort into it whatsoever, I feel like I got time back. I got emotional value back. I mean, there's just a lot of things.

1:01:11So look, I think it's like most things on your maturity with something. This makes me sound like an old man on a porch too, is that when you find a new concept, like if you're come from humble beginnings and you just now understand about investing, you're going to be just so fascinated with the process that I get it because it's a new hobby. It's a new thing. But I'm just saying when the practicality of it, because, you know, you look at the SPIVO research and everything else, the index funds outperform the active managers. and you're more than likely not going to do better than the active managers yourself.

1:01:42So if you're thinking about this as actual eating money, this is going to be your retirement money, then I like index funds, ETS, mutual funds. You choose your delivery method. If this is fun because you truly do get so much value of it, treat it like a hobby, but don't let that be the vacation money versus the eating money and automate the behavior. I have a good buddy. He's been in the industry. He's a very successful financial advisor. He's been in the industry for a long time now. But when he first became a financial advisor, he was early on trying to figure out how this all worked. And his dad let him take over a portfolio for him, right?

1:02:20Because, you know, dad wanted to support him or whatever. And one of the very early things he did is he was able to sell SMAs, like these separate account managers who were selling individuals. Oh, gosh. He's talking about me. Keep going. I was doing so good. Keep going. Thank you for the reveal. You hear this thing. I'm going to have this separate account measure to buy all these individual stocks and stuff, right? Well, what ended up happening inside of this advisor's father's portfolio is he'd be like, son, why do I own$7 worth of this? And why do I have$9 worth of this? And why is my mailbox just full?

1:02:54Or today it'd be, why is my inbox just full of all these prospectuses? It was not adding a ton of value. And frankly, managing a large stock portfolio is pretty difficult. I mean, And if you're someone who does direct indexing, it's a difficult thing to manage that well and to make sure that you're not getting off on tracking and that sort of thing. And so it's hard. So before you do it, understand why you're doing it and make sure that it's worth it. Because this same advisor that I'm talking about, he was also an accountant. And so he did a ton of tax returns. He said one of the most annoying things in the world is when you have one of his stock picking clients that's a trader that would have 500, 600, 800 transactions throughout the course of the year.

1:03:37And every single one of those had to show up on his tax return. Right. And you're talking about buying, selling, buying, selling, buying. And it was just an absolute nightmare. So a lot of times make sure when you implement these types of strategies, is the juice actually worth the squeeze that it's going to take? I saw a really funny post on the internet yesterday on like social media. And the title of the post was, do you think my accountant will be mad at me? And the screenshot was 5 ,523 trades, profit and loss,$80. Yes, your accountant will be mad at him. Well, fortunately, everything's automated now, so you can upload that stuff a lot easier, so you save yourself tons of money.

1:04:14And I want to give some context, because I think a lot of you, I want to save you the journey I was on. Because mine was a pureness of thought on this, is that when I started working, the second firm I worked at, super high net worth individuals, a lot of Fortune 500 founders, a lot of professional athletes celebrities and others we were managing the running the money for them and when i found out i could get access to these separate account management accounts that such wealthy people were using and my dad's i mean it was barely over a hundred thousand dollars but that was the minimum to get access to these managers i was like i'm going to do my father is solid because we don't come from money i'm going to get him into this stuff because this is what rich people get so if it's good enough for the rich people it's probably going to be better.

1:04:56And then, because I was new to this whole process too, even though I'm managing money, working as an associate advisor at this large firm that's doing all these celebrities and fortune 500 people. Um, I quickly realized, Oh my gosh, this thing, it's more about the sizzle than the practicality of it. It just wasn't as good as what the brochure notes. It's fun to market this stuff because you rich people stroking that ego, telling them we're going to give you something that the general public doesn't get. We're going to lock you up for seven to 10 years while we do it. You don't say that part out loud, but this is what you get when you do these type of structures.

1:05:33And I thought I was doing my data solid, but then I quickly saw the warts on this thing. And that's why even with our wealth management business, we run billions of dollars here. I don't do a lot of the private deals because I saw that, and like I said, it's back to the no hypocrisy policy. I try to treat your money like if it was my money and I learned something very valuable by seeing those doing what rich people do is sometimes more about the brochure and the sizzle than it is about actually the result that you're getting at the end of the day. So I didn't want y 'all to think that I was out there doing it.

1:06:09I mean this is, my heart really is trying to, but I learned something by putting my own father in that stuff and I was like, gosh, what am I worth doing. No, I think the three of you gave a good picture of like the places where some version of this strategy might be really good, but you have to know yourself. Like personal finance is personal, like you're saying. And there's reasons that we talk about some of the more automated things because that is going to set a lot more people up for success than some of the really specialized, complicated things. So I loved that. Mr. Quest, thank you for the question.

1:06:41And thank you to everyone who joined us for this special live stream with Humphrey. Is that it? We're already out of time? We're out of time. Oh, my gosh. Humper, you're the secret sauce. I feel like the time just moved. You're welcome. What are you saying on the normal show? I know. You're just sitting here like, oh. I know I'm doing shows with you, but I mean, that was, I'm like, now I see the timer up there. I'm like, how did an hour pass? I'll send you an invoice, okay? That was way too much fun. No, here's the good news, though. I agree. This was lovely. and even though we're turning off the cameras right now, we're going to record even more awesome content all together.

1:07:17So be sure to subscribe to Humphrey Yang's channel and the Money Guy Show channel because there will be videos featuring all three of these wonderful gentlemen coming out soon. So don't miss that. Humphrey, you're on our platform right now. I mean, it's live stream. Anything you want to share with the audience? Anything you've got something that you want them to know about? No, I mean, I've learned a lot from you guys and I appreciate you guys having me on and I'm excited to use the collab feature on YouTube, which is brand new. It's true. Basically, it means we can post together. So I'll have a video on my channel.

1:07:46These guys will have a video on your channel and you'll get to see more content. Thank you for tuning into the live stream. Is there anything else we need to say? Well, I don't mind sharing because I know when we had Aaron come on, people in the comments, they beat us up. They're like, why didn't you guys do more than just that with Aaron? We have more stuff we're going to be doing too. So there's more to come. I just got attacked by the microphone. We have more that's going to be coming your way, so we're not going to be squandering this great opportunity because we know what a special thing it is to have Humphrey in studio today.

1:08:15And so more to come. Thank you. Thank you for joining us. I'm your host, Brian. God, this thing keeps coming at me. Joined by Mr. Bo Hanson and, of course, Humphrey Yang. Thanks, guys. Money Guy team, out. The Money Guy Show is hosted by Brian Presson and Bo Hanson. Brian and Bo are partners with Abound Wealth Management. Abound Wealth Management is a registered investment advisory firm regulated by the Securities and Exchange Commission in accordance and compliance with the securities laws and regulations. Abound Wealth Management does not render or offer to render personalized investment or tax advice through The Money Guy Show.

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