What I wish I’d known at 18. July 11, 2025

26:01You can increase them. And by the way, the compound value of increasing your returns even by a percentage point is massive. So it's well worth it. But none of those come even close to what you can do by saving some extra money, investing it more. And I say saving, I mean investing. I'm talking about the same interchangeably. And they're not necessarily saving as cash in the bank. But you get the idea. Save more. Now, that means partly living below your means, which you mentioned, Ram. I mean, living below your means is its own topic, right? There's a great quote from someone I'll find while you're talking about, you know, if you spend a little bit more than you own, you're miserable.

26:34Spend a little bit less than you're soaked, right? And so, spend less than you own, yes. But also, so the other thing is earn more than you spend, which sounds obvious and silly and almost a bit trite. But I would say for people who are young in particular, investing in your career really, really matters. And not in a bloody, you say we get carried away at this, don't make work your life. Like life is too important to waste only working, right? Or work and no play makes God a dull boy. We know that. So I'm not saying work stupid hours. I'm not saying sell yourself to the devil. I'm not saying any of that stuff.

27:04What I am simply saying is when you have the opportunity to invest in yourself, whether it's education, formal education, otherwise you may be able to put educate yourself around. I'm going to make it bigger than this. and make it about your income earning potential, not just your investments. So educate yourself. Do a course. Go to uni, jump online, do a free course. You mentioned Khan Academy. Most unis have bloody free courses you can do without paying a cent. Stanford. Right? Stanford does, yeah. And yes, some of your employees will want a certificate on a resume and you've got to just do what you've got to do, right?

27:34But other times, do the course. Learn the things. Make yourself indispensable. And yes, I will say, go the extra mile at work. again not to suck up to the boss or whatever just because if you're only earning x dollars you can only invest x less something right you you increase that by a meaningful amount by by getting ahead employment wise in whatever form that that makes sense for you maybe it might be working a second job to get some extra money to put aside again don't don't kill your social life but you know drive an uber deliver pizza on a saturday night whatever it is um because you can't that's the Well, it's not the other way.

28:08It's the best way to improve your long-term returns is by saving and investing more money. And that can only come, yes, you can spend a bit less, but once you're eating two-minute noodles, you can't eat one-minute noodles, right? It doesn't work that way. So eat your two-minute noodles, but go and get another job. Do something else. Make yourself more employable at work. Get a promotion. Change industries. Do whatever it is you need to do. Easier said than done for a lot of people. And again, I get that. But yeah, it is worth it because the compound returns from your investment will absolutely thank you for it.

28:35Yes, I love that. Can I, careful what I say here. I always like when you start that way. I've always thought that, you know, to get ahead within an organization, you don't have to be in the top 1%. No. If you're in the top 50%, you will inexorably rise higher, right? Because there's, it's, and really like having been someone who's managed people before and the rest, and obviously certainly been managed, is that if you just do two things, which is if you show up and do your best, and I'm not saying do well, you'll probably stuff up all the way, but if you show up and, you know, hand on heart, just give it your best shot, you won't help but get ahead in an organization, right?

29:26Like it's, and you kind of think, oh, surely there's more to it than that. Yeah, not really when you think that, you know, there's a very large percentage of people who can barely do those two things, right? So it's kind of, you know, it's obviously do as best as you can. But this leads me to my point, which just on the back of yours is, I would push back against the person who goes into a career or down a path of education because the job at the end of it is a good paying job. That's also very true. And I say that because you might get that job, but you'll be miserable and life's too short. Time is the ultimate scarcity, right?

30:07And it's this sort of like, I'll give you an example. A, I'm not smart enough to be a doctor, but even if I was smart enough to be a doctor, I wouldn't be a doctor. I'm not a fan of sickness and illness and bodily fluids. And I just think doctors are miracle workers. And thank goodness there are people like, you know, doctors, nurses, medical professionals who are happy to be around that kind of sort of stuff. It's just not for me. I'm not, I'm not made of the right stuff. My wife's a teacher. She goes and deals with stinky 16 year old teenagers all the time. And I just look at her and go, why would you do that for?

30:37It's like, it's not even as if you're well paid for it. Right. So it's sort of, um, but my point is, is that when you, when you do something that you're, you're interested in, you'll probably put more into it because you are interested in it. And by that virtue, you'll get further ahead. Like it just, it'll, it'll seem less like work and more like play. So I've said this to my kids as well. If the kids want to, I don't know, go into interpretive dance or whatever, I don't know. No offense to anyone who's, that's their vocation, but I'm sure it's for the vast bulk of people, not a particularly lucrative one.

31:15But if that's what sets your heart on fire, then do it. I'd rather you be happy. I mean, you need to have enough of an earnings capacity to sort of put a roof over your head and have some food. But I just, I know you didn't mean to suggest otherwise, but I'll just add that on to the end of it as well. And I've got some friends from various backgrounds. There's a lot of parental pressure. It was like, no, I have to be a doctor. I had to be a lawyer. You know, there was status wrapped up in it. And it's just like, I really do get that, but I just think it does set you up for a miserable life. So I would add that.

31:52It's very important. wouldn't it?

31:57The other thing in terms of, we will get to the investing side of things, I promise. But the other thing in terms of earning money, which is you rightly say is the biggest determinant to your long-term wealth, is that if you do all of these kinds of things, just show up, do your best, get involved in an area of the economy that you're interested in, you will progress higher. And as you progress higher, it's not just the title on your business card, your pay packet will rise higher as well. But there's this thing called the goldfish effect, which is a real thing, which means that, you know, you get into the workforce, you're earning 60 grand a year, whatever.

32:33And then, you know, a few years later, you're on 90 grand a year. That's a big difference. But like a goldfish, you grow to the size of your bowl. Your income goes up, but so does your lifestyle. And to a degree it should, like it should, like no 50 year old man wants to be living the life that they did when they were 20, right? Well, let me backtrack the financial life that you lived when you were 20, let me hasten to add. So when those milestones happen when the bonus comes through, when the pay rise comes through, make sure that you top up that weekly savings goal as well, that weekly savings commitment.

33:20Because if you do it right from the get-go, you don't give yourself the chance to become used to it because you will get used to it. You speak to people who are on$400 ,000 a year and I know people like this, right? And I can tell you two things. One, a lot of them don't have two cents to rub together. They just go through, just like, you know, like water through their, like sand through their hands. It just disappears. A lot of them are pretty miserable as well. So you've got to be careful with that. Motley Fool Money. For more, subscribe to the free newsletter at fool.com.au forward slash listener.

34:00I'm going to share a story that was originally shared by David Gardner. We've talked about him a few times the last couple of weeks. Speaking of angling for a bonus. Yeah, right. Hey, boss. Hey, boss. Isn't he great? Such a good man. Lovely guy. Generous too. Generous. Two or four. Two or four. So what I wanted to – and this is a story shared by him, and it was written by a sometime correspondent of ours, actually, Dave Geck. who will hopefully be listening to this and get a bit of something from it, who wrote in to David and told – he was in the army. I've talked about this before. And I'll get the details a little bit wrong, but I'll get it roughly right.

34:41Dave was in the military, I think it was an officer school. He was a second lieutenant, probably called lieutenant of the OSS sect. I'm going to use lieutenant, Dave, my apologies. Second lieutenant. And his command officer said, I want all of you to put$5 a week aside. Just put$5 a week aside because you can afford to. what you mentioned before, provide a little bit of a size and start saving and start investing. And he said, and now what I want you to do next is every time you get a promotion, you're going to get upgraded from a second-life tenant to a first-life tenant in a year's time. I think that was what it was.

35:08And you're going to get a pay rise. At that point, I want you to take half of the increase you get and invest it. So take half of it to your point, Ram, you want to enjoy what you've got, go and enjoy that. But take half of the increase and put it aside. And next time, next time you get a pay rise, a promotion, take half of that and put that aside. and Dave was saying to David Gardner that he reckons he saves I'm sure he's retired now he was saving 40 % of his income by the time he retired and he didn't miss it and it was exactly because the goldfish you mentioned I apologize for doubling up on your thing but I really want to share Dave's story because it was absolutely starting young so the goldfish you're right and by the way the goldfish if you then put the goldfish in a smaller bowl it feels really painful because it's already grown to the size of this bowl so cutting back once you're big that's hard If I took my wife and said, oh, honey, look, we're going to turn to our expenses from tomorrow.

35:59So that means, but I like what we've got. It's like being getting used to business class and then going back to economy, right? I shouldn't say that about my wife. Me, I'd be the same. You mean I can't buy that thing I want? Well, but I like the thing. I like the whatever it is, you know? And I'm not having a particularly expensive taste. I don't mind a gadget. I'm partial to those. That's my weakness probably. And maybe a decent bottle of whiskey sometimes. But, you know, could I do it? Yes. But do I want to? No. Am I going to instinctively not want to? Yes. If you don't ever let your bowl get too big, you don't grow to the bowl.

36:33So Dave's lesson was he didn't at any point say, okay, I had to chat with my commanding officer. He said I should cut back on my expenses. And it was like, no, no, no. Just keep doing what you're doing now. But as you add to it, as you get more income, as things grow, just don't grow to the size of the fish. Again, I'm using your – it wasn't Dave's example, but to use yours because it's brilliant. Increase your fishbowl less quickly than your salary allows. and put the difference away. Now, did Dave need to save 40 % of his income in his last year of work? Probably not. But why not do it if you're happy with that lifestyle, if you never quite get that carried away?

37:03Now, the other angle I want to use is The Millionaire Next Door. And I don't know if you've read the book. I don't know if our listeners have read the book. It's a great book. But it basically talks to the fact that, you know, surgeons on average are largely broke, even though they're earning$300 ,000 a year. It's so amazing. And the people on NotMarch who are driving the second-hand car are millionaires on paper. and part of it, so it's frugality up front. But it's also, it's that element of, it's not culture, it's not personality. I mean, culture is in a national sense, I mean, personal. So I don't know what to call it, but it's that idea of like, well, I have a simple life.

37:36I haven't let my expectations, my lifestyle inflation carry me away. I've just stuck with the things I always did. I was thrifty, I was frugal early on. I didn't want the finer things in life. I didn't have the finer things in life. I just never changed. And so what happened was my increases, whether it's business owners, whether it's workers, whether it's people getting promotions, I just never accrued. And so I ended up with having all this money. So immediately next door is the point was the unexpected people who don't earn as much but save some of it versus those who are in meaningful amounts of debt.

38:06And again, apologies to surgeons listening. It was the example that was used in the book. I'm sure it's true of other high-wealth, high-income individuals. Absolutely it is. But it's the same kind of thing. Yep. Yep. It's so true. Look, so let's get to the point of actually investing some money. Perfect. And I'll jump a few steps here because the bottom line is shares are going to just do better for you than other assets. We think. History has been the guide. I know. I'm just saying you can't be absolute. Yes. I've got ESIC on my shoulder saying, no, don't make absolute guarantees. Just give an opinion.

38:42ESIC. Don't. Are lovely people and we like them a lot. Thank you. Lovely people. Thank you. Well done. They do a great disservice to all of us. Okay.

38:55Let me hasten to add before people roll their eyes and go, oh, well, I don't know, properties are pretty good. No, no, no, no, no. I'm talking about as an investment. I'm not talking about something that has utility that will give you shelter and somewhere to raise a family. And that is obviously something I will never be able to do with an investment portfolio of stocks, right? I get that. And I'm very trying hard to not mention the B word, which I would say is probably a good idea to put some aside. as we transition to a new global reserve status over the next 50 years. But anyway, let's not go down there.

39:28But within that realm of equities, which historically have been the best performing asset class, and there's also the easiest asset class in a lot of ways to get into, right? Like you can do it 500 bucks, you're away, son. Like you don't - Try doing that with property. It's not even that anymore, mate. It's like tens of dollars for most of these, the ETF apps or the, I think, shares. I can't remember the lowest. But yeah, only to say 500 bucks is not much and you can do it for a fraction of that these days. And if for whatever reason, something unexpected comes up in your life, you can sell what you need to, right?

40:01You can't just sell the bathroom of your house or anything like that. And look, I'm not even going to mention cash because that is just an insult to anyone's intelligence. If you like holding melting ice cubes, then I guess hold it in cash under a mattress. But that is a really dumb thing to kind of do. And within that, once you get to that conclusion, and this sort of comes about educating yourself early, once you've come to that realisation that productive enterprise is generally the best returning form of investment, you need to understand that there's only really two free lunches in that space.

40:34Two? Yeah, I'll go with two. The first is diversification. It's just a free kick. It is there to protect you from yourself and it's just the easiest no-brainer. The other one is dollar cost averaging. Nice. So you mentioned ETFs and they weren't a thing when I was a kid. So I guess I couldn't have given that advice to myself, but I can give it to advice as young people today. I think it's very, I'm very passionate as a direct investor of shares. I think it's something that if you've got the interest and inclination is very much worth doing. but as a starting step with an ETF, you've just got diversification, boom, out of the box, done.

41:16One and done, right? It's so easy, super low cost. And then if you just sort of say, you know, whatever it was, I'm saving a hundred bucks a week. Every month I put 400 bucks into it. And that, if you just stop there, your phone runs out of batteries at this point, right? And you've done, and all you've done is follow the advice up to this stage, You're set for life. You're 100%. Well, sorry, Asik. You're set for life. This is not financial advice. Please do your own recession. But you're pretty much set for life. I would sort of argue. And the important, I'll hand it back to you in a second, but the important thing with the dollar cost averaging is that you do it regardless.

41:58You don't do it and then go, oh, but the market's a bit scary. I'm just going to wait. Or the market's on a tear. I've missed it. I'm going to wait for it. No, no, no. Come hell or high water, bulls, bears, crabs, whatever animals are in the mix of the market, you just make sure that you are sticking to your guns. And I can guarantee you whatever stock market crash you experience at the age of 22, you won't even remember by the time you're retired, let alone 32. You're just not even going to remember it. So do that. Diversify and dollar cost average into equities. Boom. Yeah. Yeah, you've kind of taken us to almost the end, and that's kind of the point, right?

42:37I've said a million times, mate, the one-page financial plan that you can't write in absolute terms because the tax law is just stupid and superannuation is stupid. I love super. I don't mean super itself. Can you do better by getting certain advice from certain people about ways to structure and deposit this here and take that tax away? Yes. But the basic one-page financial plan that will get you 99 % of the way, because, again, we talked about it's the when you start, it's how much you save, it's what returns you get. You've probably had tax to the end of that as a fraction. I mean, it came out of meaningfully, super or not super, it's a massive difference over 40 years.

43:11So, you know, unfortunately, it is a bit of a basket case in terms of not being able to simply say, just do this. But the one-page financial plan is very simple. It's start early, save a lot, diversify, dollar cost average, and be patient. That's what's real. How is that not one part of a year nine education? Like the education minister needs to like, hello? It is the easiest thing in the world to do. Ned Kelly is a very interesting character, but I can learn about him whenever I want. There's a million and one things that could be cut to make room for something as critically important as that.

43:49Anyway. Great, great. No, that's a good point. So I'm going to say, I'm going to double down on be patient. Because you've done the rest. And yes, you're not worried about crashes. That's true. I'm going to draw a finer point on this one, which is volatility will happen. Now, I haven't gone back and done the numbers. I wasn't investing during the 1987 stock market crash, but I remember it. I remember it happening. I remember the stories of people jumping out of windows, which is horrible. And then since then... I always thought that was a... I was going to say a myth. Yeah, I don't have a myth.

44:23I believe it wasn't widespread, but I believe there were cases. Really? Yeah, it was reported anyway. In Australia? There's a famous... No, in the US. There's a famous photo of one guy. Anyway. Oh, yeah. You'll know the photo. Yes. Anyway. All right. So, why I wanted to... And I've done the roll call before and I will do it one more time very, very quickly. But since the... Well, go back to the 1980s. By the way, if you're 1890, it feels like a million years ago. And yes, I know it actually was. Every day you see one of those things of, you know... It's like Indiana Jones was filmed in like 1980 instead of 1936.

44:56And so now it's like we'd be filming a movie in the 1980s. Like, man, how is that possible? Anyway. Scary. Yes. So 1980, we had, like 70, we had oil shocks. Oil price went up through the roof, caused a lot of inflation, caused the early 80s recession. Famously, Paul Volcker, the Fed Reserve Chair at the time, put rates up to basically kill inflation, which, by the way, worked for 40 years, at least substantively. We won't get to the inflation question or the RBA or central bank question. Thank you. But by way of setting up the history, we had the go-go years of the 80s, the Alan Bonds and Christopher Scases.

45:3187, massive stock market crash. By the way, we say massive. I think in 87, the market always finished up for the year still, despite that. The 87 was so good. Yeah, that's right. But big crash. 1990s, we had a recession. 1997 was the Asian financial crisis. 1999 and 2000 were the dot-com boom and subsequent bust. We had the 2007-89 GFC or the housing boom and then the GFC. Eurozone crisis was in there. And then Brexit comes at some point in that picture. We then have COVID. Right? And then we are where we are now where we've got some trade wars and there may be anything or nothing. Global geopolitical reordering.

46:11Terrorism attacks, by the way, through that period, both the US and Bali. Why do I say all this? I say all this because the market was really volatile during lots of that period of time. And as you say, Ram, sometimes we say volatility is for falls. So let me say volatile in both directions. I mean, the 87 was the story. I was volatile on the way up, volatile on the way back down. No one ever says it's a volatile market when it's booming. Right, exactly. But it is, right? And so that's why – so be patient is easy. I'm going to say two things which are part of that, which is firstly, don't bank the gains and don't believe you're a genius.

46:44Yeah. But also when the market falls, don't bank those. Don't sell out during those periods of time or think you've lost the plot or the economy is going to crash or the stock market is never going to recover. Those things simply haven't been true. And again, with a nod to the cap to ASIC, I can't tell you what will happen, but what I am saying, I am fully invested because I expect, firstly, there will be lots of volatility in both directions. And despite that, things will go well. And I'll finish this bit with the Vanguard chart thing I do regularly, which is over the last 30 years to June 30, 2024, so the previous 30 years, the market turned$10 ,000, a hypothetical 10 grand, into$130 ,000, despite many of the things I just talked about.

47:24But here's the other thing. I then go on to say, all you had to do was nothing. And I don't mean you didn't have to do anything. I mean, you have to do literally nothing, as in don't do anything. And when you say you don't have to do anything, you say you don't have to make an action. You can if you want. I'm saying, no, no, no. You literally have to do exactly nothing. thing you had to leave it alone and that feels like in hindsight or abstract an easy thing to do it that's fine when the market's down 10 20 30 percent when people are saying that trade war is going to cause a recession when covid hits and maybe it's the end of the world as we know it or maybe you know when all these things happen it is so easy to read the headlines read the doom and gloom from people who make a trade and selling doom and gloom and think i i really shouldn't take an i should take an action i should i should make a decision i should go and do a thing and I get it, I get it, I get it.

48:12I just don't think necessarily that's, well, I think specifically you should do nothing because over time, unless we've hit peak capitalism, the future is brighter than the present. And if the future is brighter than the present, all you gotta do is be there at the end for that journey. And so just, you know, whether you wanna use the roller coaster metaphor, whatever you wanna use, you know, the market has always gone higher over time. I suspect it will keep going higher over time over the longterm, not every day, not every week, not every month, not every year, Not every five years, but almost every five years.

48:41But over time, the market has created extraordinary wealth, but you have to do literally, exactly, and totally nothing, not a single thing. Now, you should add more, so I'm not going to say, I'm not saying don't touch your portfolio, you should add to it, absolutely. But the 10 grand that became 130, there was no extra money added. Imagine if you'd actually added money during that period of time. Imagine how much money you'd have then at the end of the period. But you absolutely have to remain invested. So Ramps is diversified, dollar-crossed average, absolutely and then remain invested make sure you can take full full advantage i love that um i've used i use it too often the blaze pascal quote um i found another one oh okay lao su the master does nothing yet he leaves nothing undone oh there you go isn't that good mastery lies in aligned in in aligned in action letting nature take its course oh i love that Letting markets take its course just to sort of fit that into a little mold.

49:41The other one that I know you're fond of is Lewis Carroll, Don't Just Do Something, Stand There. Yeah, it's fantastic. It's just really, really, really good. It's so fun. And another one that's come up too, thanks ChatGPT, the hardest thing in the world is to simplify your life. It is so easy to make it complex. Oh, that's investing. Isn't that just perfect? Replacing life with investing, yes. Do that again. Put investing in and do it again. And the hardest thing in the world, the hardest thing in the investing world is to simplify your life. It is so easy to make it complex. And it's, there is an entire industry.

50:15In fact, in Australia, I think it's our second or third largest industry, which is so depressing. So depressing. Well, let's not go there. But, you know, that entire multi, multi-billion dollar industry exists to be as complex because we have, there is a bias. I forget the name of the bias, but we prefer, We prefer complexity because complexity infers sophistication, infers being better. For you to go, imagine you're a financial planner, to take your example from before, and you sit down with someone for 10 minutes and you give them the half page, spend less than what you earn, invest the rest, do nothing.

50:55It's just like, oh, the other person was going to give me a 14 ,000 page report full of charts and patterns and spreadsheets. And I had to have these, you know, multiple, you know, consultations and the rest of it. Now I'm being a little bit unfair because before anyone writes in, yes, I know financial planners do a lot more than that kind of stuff. But, but you really, you really, really, really, really, as a general rule, KISS is a great principle. Keep it simple, stupid. And, and I just, I just cannot emphasize that enough. I do it, in fact, even with my valuations these days when I'm looking at stocks.

51:30I have a very simplistic approach. I know it is. I'm almost embarrassed when I put it out there because it feels like I'm just drawing on the back of a napkin with a crayon here while other people are doing these really advanced things. And I just, I just, I love the elegance, the simplicity of the approach I use. I've still got to make guesses, but I only have to make a handful of them. And, and, and, you know, it's, it's sort of, it's actually been a real game changer for me. And just in terms, we spoke in a recent pre-record too about how we kind of invest. And it's another thing I've really leaned into is that we have such a bewildering array of choice when it comes to listed equities that it's just like, I want to focus on the easy to understand stuff because I'm not a smart man, right?

52:08I need the easy kind of stuff. So, yeah, I cannot emphasize that enough. And just as you say, let it run its course. I'll confess to you Scott and our listeners I do I do break out the ComSec app every day and check I do I do I'm embarrassed to say it I know you don't because you're like you're freakishly good at this and I don't something wrong with you you're a freak of nature because you're right And I always say, oh, don't look at it every day. It's pointless. Truth is, I do. I do. I do. I can't help myself. But I know it's wrong. Fortunately, I don't act on it, you know. But I will, I guarantee you this, when there's a lot of green on the screen, I've got a bit of spring in my step.

53:06Oh, yeah. Yeah. You know, when it's red, I'm a little bit dejected. Yep. You know, it's like nothing has changed. And in fact, in fact, if I was being honest, I'd say I should be happy. As someone who's still earning an income, I should be happier when it's red. It's like, wow, I can now bulk up my portfolio with things that are cheaper than they were yesterday. So, look, we all have some guilty sort of pleasures that are in there. I guess that's one thing, but just don't succumb to that constant pull to act. And just to round off the thought, when you sort of say about not doing anything and also putting in context our age, back in the day you know 3 o 'clock on a Sunday afternoon I couldn't do anything no yep I couldn't do anything you can do anything at 10.30 on Monday because you don't have to ring your broker to get a stock chart so you just you wait till tomorrow you look at the 9 o 'clock news or the you know the next day City Morning Herald you go oh I see that Woolworths shares went up a cent yesterday oh so you know and we are this is happening right we're going to a world of 24-7 trading everything's in your pocket you know open up your phone press a button and I don't think it is good like it's in a lot of ways the convenience is i mean it depends what you think of as good but it's a very resounding not good when it comes to dangling that potential dopamine hit that's what because that's what it is and this is can i can i pull on that thread because yeah i say i say regularly on social media and this is where i get much of my feedback which is great i love it i love it for that you know i don't think free trading is good why you know do i really want to pay for trades no because it removes the friction point it makes it more likely I'm going to trade.

54:45I don't think having real-time access to your share, I don't think 24-7 trading is good. And I've had people say, well, of course, then I can trade when I want. I should be able to have control of my assets and do what I want when I want. It's like, that's fine. But you've got to remember what you're really saying here is I am the rare animal who can ignore every single human impulse that evolution has implanted in our brains before we even knew what investing was. And that somehow I'm going to be... Now, Warren Buffett moved out of New York because he said he was getting too much stimulus. This is the time when there wasn't an internet, There were daily papers.

55:15There was phone calls. He moved away. He moved away across the country. Now he moved home, so it was probably part of that as well. But he moved away because he was like, I don't want that stimulus. Now think about that relative to today. And if your view is I need 24-7 training so I can take a position, I can do this, I'm going to say to those people who would say that with the absolute utmost of love, that is your ego talking, that is hubris talking, that is you doing the masters of the universe thing, I'm good enough, I'm better, I want control, don't you tell me what I should do. you're preferencing and prioritizing your ego and your need for command and power and control over the chance of you actually having a really really good financial outcome can i um can i share with you a quote um i looked it up while you were chatting uh the farnham street blog by the way is a great blog isn't it's james uh shane parish well done yes he writes i'm going to quote large chunks because it's just as easy in the book he doesn't say the book but it's uh in living with complexity donald a norman offers a perspective on why we need complexity and here's the quote quote some complexity is desirable when things are too simple they are often viewed as dull and uneventful psychologists have demonstrated that people prefer a middle level of complexity too simple and we are bored too complex and we are confused but here's the kicker mate moreover quote moreover the ideal level of complexity is a moving target because the more expert we become at any subject the more complexity we prefer this holds true whether it's music or art detective stories or historical novels hobbies or movies end quote and we could say investing as well absolutely and it's also why a lot of people who are successful in their professional lives over over complicated investing because they want the intellectual challenge they want to believe they can do it they've had success the ego's already up and feeling good and i'm going to be the master with you so i'm going to take over this thing you said you're a you're a simple man i am very rarely the smartest bloke in a room but what I can do relatively well is not get over my skis.

57:06I'm going to do the simple things as well as I can and that's it. That's as much as I do. Now, I will say, by the way, you made the point about checking your brokerage account. I will confess, speaking of confessions, when we've had times when the market has tanked for long periods of time, I lose all confidence. I'm like, you know, I'm trying to do this for a quick ride. The dividends come at night, don't they? Mate, they do. And it's like, I'm falling in. It's falling in. It's falling in. Oh, this is bloody stupid. I'm falling in. That's bloody stupid. Maybe I should just buy it, and I've said a million times, the sin is not in the temptation.

57:35The sin is in the action. Now, I'm no biblical scholar, but I'm pretty sure that's right. In any case, in the investing sense, it's not feeling that way. It's feeling that way and doing the right thing anyway. That's the key, right? So, again, David Gardner, here's another quote. Dave, you really better give me a pay rise. You know, it talks about, during the GFC, he was recommending stocks every month and every month they'd fall further. The GFC downtrend lasts about 16 months. And so he's just doing it, and he's doing it, and he's doing it, right? And I know he's doing it for his own, but he's doing it for his members.

58:03I'm racking recommendations that are falling in value. I'm thinking, what am I doing? This just sucks. It sucks. I'm losing money for other people. I'm feeling miserable about myself. I'm wondering about my own beliefs. Everyone hates you. Let's not forget that. There's plenty of emails coming in. You, so-and-so, you've lost all my money. Right? Yep. People love to... Yep. You don't get the same letters when things are going well. I'll say that much. But my point is, it's okay to feel that way. Yeah. It really is... the skill I've said before, Matt, successful investing is overcoming our evolutionary biases that I'm convinced that's the only reasonable definition of what it is.

58:39You know, successful investing particularly is like, that's all it is. So rare, right? Yeah. And it's bloody hard, but that's why you should, you need to somehow, if you're 18, you've got time to do this, develop two halves of your brain, right? And put a massive firewall between them. There's the bit of how you feel and you're going to change that because feelings are feelings, are feelings, are feelings. Especially if you work on a psychologist, but you probably can, but your actions, they are the things you need to keep under absolute control i feel rubbish but i'm not going to take the action that my every fiber being wants me to take because i just know it's not right i've said during covid it's exactly what i did i bought shares not because i'm a genius not because i knew what was going to happen not because i knew the fall was going to be short not for any other reason other than i knew i should just keep doing it even though it sucked i just did it because i should do it so i just did and that's worked out really nicely for me and again i'm not claiming any credit for it it's not you know it wasn't there was no brilliance on my behalf you might claim any credit, it's just being able to keep my head down, put one foot in front of the other and go this is awful but I'm just going to slog through it because I know that's what I should do and that's the self-discipline bit I suppose.

59:41I don't want to dox myself too much in terms of my custody solutions and I don't want to talk about Bitcoin. I don't, but just on that point the way that we've got it set up is that I can't unanimously withdraw and send the funds to an exchange. partly if someone like threatens me with a knife, they can't rob me. But also for that, so there's no panic, you know, and it just sort of means, I guess we can collectively panic as a household and that could do it. But I think it just adds an extra layer into it. So I'm not to make it about that particular thing, but just something that sort of adds friction to it.

1:00:22I actually played tennis last night with a friend of mine, longtime friend, and he's a wonderful guy, but he's terrible with money. he just kind of just just goes through his fingers but he was sort of saying that um for him like we would sort of obviously we're talking about bitcoins that's all i talk about and and and he was just sort of saying oh it's a bit of a pain to move around but thank goodness because it's like safe oh that's myself yeah which is good um uh like we're coming towards the end of it but i did want to squeeze one more in um in terms of advice let's do my last one because I've got one too and if you steal this one as well, it's going to say, I'm just copying you.

1:00:57Do you want to go first? No, you go. Well, I was going to say, forgive yourself, right? Because I'm not going to say you might. I'm going to say you will and I'll bet the farm on this. You, young person, are going to make a thousand dumb decisions. And all people too, by the way. Yeah. Not because they're young, just because people are big. I'm speaking as if I don't make dumb decisions. You're so right. You're so right. But you poor young people, kids these days. But you do make, Like, I mean, it's just, I'm not even trying to be critical. I mean, I use myself, God, the things I did, like, it's just, if my children do half of it, I'll be so disappointed.

1:01:33Like, just dumb, dumb, dumb, dumb. And it's kind of unavoidable because you just don't have the life experience, right? Yeah, right. You can tell a thousand times, don't put your hand on the stove. Don't put your hand on the stove. You're going to burn your hand. You have to touch the stove every now and again, because that is the lesson that you will do it. So when you make a dumb mistake, forgive yourself. I mean, the good thing about, there's not many good things about not having much money, but one of the good things about not having much money when you're young is that you can't go to, you can't, even if you blow yourself up entirely, right?

1:02:08You scoomp and save and you work your guts off for like five years and you build up 10 grand portfolio and you lose the lot. Don't get me wrong, that sucks. I did a massive backward step. But in the grand arc of your life, it's not – it is recoverable, I guess, is what I'm trying to say. So the real mistake is in not learning the lesson. Like that is the mistake. And that's where I am pretty sanguine about some of the dumb things I've done where I can at least go, well, it wasn't obviously dumb. And at least out the other side, I know not to do that again. I'll be pretty content with myself on that.

1:02:51Where I get really angry at myself and just like, oh, cringe when I think about it is when I make the same mistake for the 12th time. Like, what was I thinking? How many times do I have to have my face rubbed in this particular, you know, pile of dung before I go, that's not a good idea. Andrew, you can't do this. You know, maybe this time, maybe this time I'm feeling lucky. So that's just something you've got to get over because I've seen this many times. Anecdotally, yes, but the first-hand experience has been, yeah, I'm going to invest in the stock market too. So friends know I sort of work in this arena.

1:03:28They couldn't care less until it's on the news and there's a massive roaring bull market and all of a sudden they're interested, right? It's like, I should do this. I'm like, oh, great. Oh, well done. You've arrived at the party. It took you too long, but I'm sort of glad that you're here. and then of course they're only doing super frothy you know and inevitably inevitably there's a pullback this is stupid it's all rigged why don't I listen to you and then they just go back to you know the ING saver account or something oh you've learned the wrong lesson you know and that's the opportunity cost of that is just massive so you've got to make mistakes learn from them pick yourself up move back on.

1:04:13You know, it's like, what did Bruce Wayne's dad say? You know, why do we fall? So we can pick ourselves back up. Nice. I'm going to add to yours and finish with mine, mate. And I only, you kind of gave me the other half of the invest yourself, you know, work for money but don't do a job you hate, which was really important. I'm going to throw just a slight distinction on your point, which is not, again, nothing you didn't say or I'm not disagreeing with you, but I want to remind young people you don't have to take risks. Yeah. And there's a school of thought out there, which is you're young, you take all the risks you want because if you fail, you can start again, which is kind of the one you use.

1:04:48Not you were saying to take risks, you were saying you can start again, which is true, right? So absolutely, do what you do, learn your lessons, make your mistakes. And if you do, if the worst comes to risk, you can start again. But there is a sense of like, well, I can take all the risks in the world because if it doesn't work, I can start again at 25 or 20 out of 30 or 35 or 40. And that's not untrue. But you don't need to take those risks because you've got, we've just talked about, again, time, returns, saving rate. You've got so much time. If you're 18, you can underperform the market by a decent margin and still retire a millionaire.

1:05:15Yeah. Like that, you know, and that's kind of – Yeah. That's just I think the point I wanted to make is – Although a million is not going to be much for you when you're – Well, pick it up. Yes. But I mean, I was using a – I mean, if you're 18 and you put enough money aside and you invest for the Buffett story, right? 99 % after 50. Yeah. You know, it depends how long we take it. I guess my point is just people say, well, you're 58, you're almost at retirement, don't take any risks because you can't start again, which is absolutely true. I'm not saying people that you can't take risks. I'm saying you don't need to.

1:05:46The returns are so, and by the way, that doesn't mean saying cash. I'm saying invest and invest well. Diversify dollar-cross average, stuff that Ram's already talked about. Just you don't have to say, well, I'm young. The only way I'm going to make money is to buy this speccy miner and take this big risk of lotto tickets because I've got plenty of time to make it back. You do if you make a mistake, but don't make deliberate mistakes. Don't handicap yourself unnecessarily by taking silly risks. Be sensible, invest well, but you don't have to get a spectacularly great return. It's not death or glory, right?

1:06:14Don't chase glory and risk death. Do modestly well for an extended period of time and you will have as much money as you need. Yep. The only thing I'll add to that is, and you did clarify it, but just to underline it, it's just like risk is one of those words that means different things to different people. So, you know, Scott is not saying don't invest in shares, even though the accepted wisdom is they're risky, right? You know, Woolies is an entirely different category to a early stage biotech that's still not out of phase two trials, right? Like chalk and cheese kinds of stuff. And that's the risk that you're talking about.

1:06:50Thank you, yeah. Yeah. Volatility is not risk. I know we make that point all the time, but we kind of have to because it's just something that people just fail to recognize. So volatility is the natural order of the world, in my humble opinion. That's why I said silly risks other than risks at all. That difference is really important. Well, actually, here's the thing. I would say for a young person, this is what this show is all about, this episode, is that the biggest risk you could take is putting your money in cash, which is antithetical to accepted wisdom. And we've talked before about, oh, here's another bit of advice.

1:07:24I'll sneak this one in. I've railed against this before. When you do get your first job and the boss hands you a slip saying, here's your super fund, tick one of these boxes, tick high risk. Yes. Tick the highest risk thing that you can tick. And it will go – it'll be counterintuitive. Within the premixed options. Within the premixed options. You're not saying look for a stupid risk and invest in specky minus. Sorry, sorry, sorry. Yeah, so they'll give you conservative, balanced, words that sound good. And you're like, well, I'm not an – I tick the conservative box. when I got my first job because I'm not an idiot, right?

1:08:00Allegedly. But no, I clearly was an idiot. I mean, I eventually recognized the error of my ways and went 100 % equities, but that was probably 12 years. I don't know how much money I left on the table by ticking the wrong box. And I really wish that they would change. This is where regulators get it so wrong. The heart's in the right place, the intention's in the right place, but it just it steers people towards away from what they should do when they talk about risk they're talking about volatility and for someone who's got 40 50 years of investing ahead of them whatever the dow jones is doing overnight is like the like so distant uh in terms of you know what what matters in your life and where you'll end up yes i'm gonna finish with my one mate which is um somehow kind of out of order but also perfectly in order um and i i was gonna say reinvest dividends I'm going to make it larger, which is just reinvest your returns.

1:08:57And it sounds obvious and I hope – well, here's the thing, mate. You and I have been doing this for a long time and it's really important to sort of stop sometimes and take a step back. Like, okay, well, what makes up those returns? People – some people will think I'll leave my share price growing but I'll spend my dividends because as income I get – I spend that, I keep the shares and, you know, grow the capital base. You can do that. But over time, somewhere around 40-odd percent of ASX returns come from reinvested dividends. and so here's a really we started with automation we're going back to really tin tax process stuff here when you start to invest create a brand new savings account I have mine with Commonwealth Bank because I'm with the Comsex a broker I'm not saying go with them I'm just saying that's what I've done I don't bank with Commonwealth Bank I have an investment account I put money from my pay into that investment account money goes in it never ever ever comes out right because when you start to say I can tap that for whatever I want you undermine compounding.

1:09:52What did Munga say about compounding? Never interrupt it unnecessarily. First rule. And so when you get dividends, direct those dividends to that same account. So save money, put it in that account. Get dividends, put it in that account. Now, by the way, also have an emergency. If I'm not going to full personal finance mode today, have an emergency account so you don't need to tap your shares or your dividends. So that's going to cover you. But once the money goes in, please, please, please reinvest those dividends. You can use a dividend reinvestment plan if you prefer. If it's easier and simpler, go for it.

1:10:19I don't, Ram doesn't. because we want to put that dividend money into our best ideas at any point in time. And it's probably not the company that paid the dividend. So do that, you know, or don't do that as you want to. But please, whatever you do, don't let your dividends or your share sales settle into your own transaction account. The one you use for all your spending, the one you get paid into, it's got to be in a separate account. Please, please reinvest those dividends. If you sell some shares, make sure that money goes straight back in and buying more shares. Don't use it to spend. Don't think of it as a windfall.

1:10:48Once you take money out, the cost of that compounding is extraordinary. Can I sneak one more in? I know I said I had the last one. You reminded me of another one. Try and think in percentage terms, not dollar terms. Because one of all the challenges to have is a pretty good challenge to have. But as you go along this path and as the years go by and as you get better at it, your portfolio should be growing. And so let's say your first share trade is you've saved and saved and saved and saved. you've got$1 ,000, right? And you invest it and it feels like a big deal and you keep doing that. You know, when you're 47 and your portfolio is worth 200 grand, it's just like, don't stuff around with a$1 ,000 share purchase.

1:11:30It's ridiculous. You know, what you need to be thinking of is in percentage terms. And it's a hard thing to do because I mean, these days, I'm making individual transactions that are multiples the size of my entire portfolio when I was 20. Like, it's just like, I'm investing how much? And this makes me sound like I'm bragging about how rich I am. I'm really not. I just, I did a really, really, really tiny portfolio back then. But it's a challenge. It's a mental hurdle to get past where, and don't think that I'm buying X dollars worth of stuff. I'm allocating, you know, 2 % position or something like that.

1:12:03The dollars actually don't matter. Really. It's really about whatever size of, you know, whatever the size of my pile of beans is, I want it to be growing at a certain rate. And I want that to be split up in a certain way. And I want to be allocating into it in a certain, in a way which is more viewed in a proportional, through a proportional lens rather than an absolute dollar lens. Because those dollar lenses are going to be ridiculous. What you're going to have, and it's easy to do, is you get these portfolios with 70 different stocks with all these tiny little positions, and they're just impossible to manage.

1:12:37One of them could 10x, the other one go to zero. It just makes no difference overall. So what's the point? So just scale up your position sizing as your portfolio grows. Love it, mate. We've gone for long enough, I think. Lots of great content. I've got so much stuff. I actually don't do this. I almost never do this, mate. But I'm going to go through what we've gone through. We've gone through saving a little bit, automating your investing, educating yourself, investing in yourself, saving half of your pay rise, buy shares, diversify, dollar cost average, do nothing, literally nothing, kiss, keep it simple, stupid.

1:13:08Forgive yourself. Don't take silly risks. Reinvest your dividends and scale your thinking. I love it. That's a pretty good list. I'm pretty happy. I'm pretty happy with that. And again, if I sound surprised, it's because neither of them or I have actually prepared this one. As we do, we tend to try to shoot from the hip, which doesn't suggest any lack of care on our behalf or consideration for our listeners. We've been doing this for a very long time. So it's more useful if we just do it as we go and let the conversation go where it leads. And I reckon that's a pretty bloody good list, man. I'm happy with that.

1:13:37I'm very happy with that. Me too. I hope it's helpful. If there's someone in your life who you think would benefit from this, please share it with them, not just for our egos, though we can always do with a bit of stroking, but mostly because we hope it actually, if you think it's useful, then hopefully it's helped them as well. And as I said at the beginning, if you are 28, 38, or 48, and you haven't done some or all of these things, the best time to start was at 18, the second best time is right now. So please do that for yourself. Do that for us. If you like the pod, please share it with people you care about.

1:14:04Hey, mate, would you come back on Sunday? Yes. Hell yeah. I probably already have. I was going to say, the actual answer is I don't know because we're recording this well in advance. And if we get good Lord willing, the creaks don't rise and the podcast gremlins leave us alone. We'll be back on Sunday morning. So enjoy the first half of your weekend and Fool on. Cheers. The Motley Fool and people appearing in this program may have positions in the companies mentioned. General advice only. Please speak to your financial professional to understand how it may pertain to your situation. Subscribe to the free newsletter at fool.com.au forward slash listener.

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