67: From $66K to $2M w/ @PersonalFinanceClub

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1:35few years ago, I've built a seven-figure media business and actively advise some of the most well-known fintech companies around the world. And as the show name might suggest, every episode, we talk about rich habits as they relate to business, finance, and mindset. However, we try and bring you two unique perspectives, one from an industry veteran, which is Robert, and the other myself, someone who's still in the process of building wealth and figuring it all out. Robert, this is a special episode. We got a special guest with us. So break down who this is and what we're going to be talking about in today's episode.

2:07I love it. Yes. On today's episode of the Rich Habits Podcast, we're joined by Jeremy Snyder. You might recognize him instead as Personal Finance Club on Instagram, where he has over 619 ,000 followers, which is really, really amazing. Every week, he posts educational graphics that help debunk and demystify the lies we see in the headline news and on social media every single day about personal finance and investing. and he inspires millions of people to begin their wealth building journey just like Austin and I do. Jeremy, thanks for joining us. Why don't you tell the listeners a bit about your story, where you came from, how they can find you, and then we can get right in.

2:47I guess my story started in college. I had a job offer from Microsoft to go work as a computer programmer and decided that corporate America wasn't for me and instead decided to start a company. I had no idea what I was doing. I was Googling things like how to start a company. I didn't know what forms you to fill out. I had no clue about building a brand or product or revenue or anything like that. But I was very stubborn and stuck with it for years. And the most I ever paid myself was$36 ,000 a year. I never took any venture capital or funding. I just bootstrapped basically spending less than we made along the way.

3:19Eventually hired up to seven employees. And then I sold the company when I was 34 for just over$5 million. And so I went from being, you know, living borderline poverty level in San Diego on$36 ,000 a year salary to being a multimillionaire, literally with the click of a refresh button on my checking account website. For a year after that, I did what I thought you're supposed to do as a young retired person. I traveled, I played video games, I worked out, every day was a Saturday. That was fun for sure, but I lacked purpose and tension in my life. And so then I started following my passion, which is teaching people about personal finance and investing, which is what I do now.

3:55I went to the brand Personal Finance Club. And so like you said, I kind of just teach the basics of personal finance and investing almost all the same messages you guys are giving here on your podcast. Well, we're definitely going to get into what happens when all of a sudden millions of dollars end up in your checking account. I've been there a couple of times and obviously with silly bands in a very huge way. So I can't wait to cover that later on. But yes, as you alluded to, Austin and I have several money topics and slogans we believe in as it relates to building wealth through personal finance.

4:25But we'd love to hear your perspective. Give us three things that every listener right now should know about money and building wealth. And we can see how much they line up with what we believe, because a lot of your message is similar to ours, but everyone has a different mousetrap because personal finance is not a one size fits all. For sure. And I love what you guys do because when we grow up, we have this misconception about wealth. I think you think that wealth is driving a fancy car or like making it rain at the club or whatever, but I don't think that's what wealth is. That's spending, right?

4:58Wealth is what's left over after you have spending. And so I'd say the first tip is live below your means. We all know people who make healthy six-figure salaries who are living paycheck to paycheck. If you make half a million dollars a year and you spend half a million dollars a year, you're broke. You have zero dollars. But if you make$60 ,000 a year and you spend$40 ,000 a year, that$20 ,000 a year you're not spending, you can easily become a multimillionaire. So that's the first thing. You have to live below your means. I'd say the second is to invest early and often. With that money that you're not spending, just regularly dump it into investments.

5:30The two things I invest in mainly are the stock market and real estate. Things that pay you for owning them over time and are likely to go up in value. And it's not about timing the market. It's not about guessing. It's not about speculating. It's not about gambling the market. It's just about consistently buy, buy, buy, buy, buy over time to ramp up that compound growth. And then the third I'd say is keep it simple. The first time anyone dips their toe into the world of investing, it seems impossibly complex. You know, there's visions of like Wall Street traders frantically waving pieces of paper over their head on like, you know, in Hollywood movies or day traders with 14 screens with a million charts trying to like predict what's going to happen or, you know, crypto or futures or options.

6:11But the reality is the best investors keep it very, very simple. They buy a few things, maybe even one thing, and just keep buying more of the same thing over time. And so, you know, my favorite way to invest is just to buy one single thing, which is called a target date index fund. Like, you know, my net worth now is over$5 million. I'd feel very comfortable putting about 90 % of my portfolio into a single target date index fund that has inside of it is diversified for you. Thousands of U.S. stocks, thousands of international stocks, thousands of bonds. And it's the simplest strategy, but it's going to be most investors who are kind of like frantically guessing and making things overly complex.

6:46I love the perspective, right? And I think what's so fun about this show is you're right. We align on a lot of stuff, but we also don't on a couple of things, right? So invest early and often. We are right there with you. Live below your means. We're right there with you. Keep it simple. We're right there with you. The only thing I think that's so funny is I didn't take you as a target date fund guy because with us, we always thought that sort of these target date funds over a long period of time obviously underperformed the S &P 500. And Robert and I think, right, it's like if you're going to be invested for decades, Let's say you're even in your 40s, 50s, and 60s, right?

7:21You're not just going to sell everything overnight. So if you're going to be invested for several years, if not decades, might as well ride the wave of the S &P 500 and other indices versus, I guess, trying to balance that between bonds and index funds and things like that as well. What's your perspective on that? Why do you choose index fund-focused target date funds for yourself? Is it because you know you do need some diversification with the bonds and the fixed income side of the equation there, and it's happening automatically behind the scenes like target date funds do? or is it something else?

7:48I think it's important to break down what's inside of a target date fund. If you buy a target date fund that's sufficiently far out, so if you're a young person, you're 20s, 30s, even 40s, and you're buying a target date fund that's 20 or 30 years out, it's going to be 90 % stocks and only 10 % bonds. If you're saying you want no bonds, okay, fine, but the difference between a 90 % stock portfolio and 100 % stock portfolio is going to perform very, very similarly. Of that 90 % stocks, about 60 % of it is the US stock market, which is essentially the S &P 500. And so the S &P 500 is inside of a target date fund, but it also has international stocks and it also has bonds.

8:23And so why do I do it that way? Here's why. Because the last 15 years, the US stock market has crushed the international stock market. The next 15 years, is that going to happen again? Nobody knows. But if you look over history longer than 15 years ago, it's kind of more like a pendulum. Sometimes international outperforms, sometimes US outperforms. And if the US isn't the economic superpower the next 100 years that it has been the last hundred years. I don't want to put, you know, a hundred percent of my portfolio in a single country's, you know, stocks. That said, obviously the U S is like an exceptional country.

8:53About half of the market cap of the globe exists in countries headquartered in the U S but still, you know, all things considered, I think the market is very efficient and people know what other countries' stocks are worth. And so I'm going to diversify those other countries in terms of underperforming long-term, I agree. And so most of the time you hold on these target date funds, you are going to be 90 % stocks plus because some of them actually are more than 90%. But when I talk to people in their 20s like you, Austin, they're aggressive like you are. They're like, yeah, I want to ride the wave.

9:21I don't mind the volatility. I want to be all stocks. But when I talk to people in like 70, they don't want whatever clown is in the White House at any given time or whoever's running the Fed or whatever happens to the stock market to have their nest egg get cut in half when they're depending on that income to survive at that point. And that's where bonds come in, right? That's where you're kind of taking some of your chips off the table. And target date funds do that in a way where it's not reactionary to the market. I would hate to see someone who's like aggressive, aggressive. They're all in tech stocks until they're 65.

9:51Then tech stocks drop 70%. They freak out. Then they go into bonds. And then they're like, you know, retirement's way less. And the only way to do that, in my opinion, that's kind of smart and systematic is to just take a little bit off every year, which is what a target date fund does automatically for you starting kind of in your mid 40s or 50s. it starts transitioning towards bonds. And then when you're 65 and 70, you have more like a 60, 40 or 50, 50 portfolio. I think the key word there was systematic, right? Because you're 100 % correct. That is exactly how target date funds work is it's a very systematic approach to investing over a long period of time.

10:23So I appreciate the feedback and the walkthrough. Yeah, I'm on the other side of the fence about that. Everyone knows I'm not a huge fan of target date funds only because I just believe over time I can pick a better mousetrap for performance. and I just am more of the ilk that you should have active management of your portfolios. And so with target date funds, they could be good for the right people that have a low risk tolerance and are looking for ways to be safe with their money, but still grow it. Because let's face it, a lot of people that put individuals in target date funds, they're not there to really grow the portfolio as much as they are to sustain it and make sure it doesn't lose money.

11:07So that's where target date funds can come into play. But then you can also look at like even BlackRock right now has a new target income portfolio that is completely dedicated to bonds. And that one, you know, they're saying is gonna make around 6.7 % per year gains. So I think it's just, this really leads us down the path that there is no one size fits all in personal finance. And that's why we bring on guests like Jeremy is to hear a different side of the proverbial fence and decide for yourself what you think is the best way to go. So to summarize for me, target date funds can have a place in people's portfolio.

11:48I believe that mathematically they would underperform something as simple as if I had a group of index funds like VOO, QQQ, and VGT over 30 years. I think my clients that I would tell to do that would outperform a traditional target date fund. but there is a time and a place for them. So not against it. It's just not my favorite recipe for growth and sustainable gains. We always want that positive arbitrage for people to build wealth. So that would be my take on it. I would say the other side of that coin though is that I think of a target date fund is like the entire pie. It's got all the US stocks, all the international stocks, and all the bonds.

12:26And Robert, you're saying, I like these three slices better for the next 30 years. And you might be right, but you might be wrong, right? Because we don't know what the future holds. And so the target date fund says, instead of speculating on individual slices, buy the whole pie, guarantee yourself your fair share of all future growth of the full market. And then I say, you know, with the other 10 % of your portfolio, that's where you can kind of get into speculation, stock picking and sector picking, things like that. That's how I see it. Got it. Well, speaking of speculating, you sold your software company about a decade ago, you mentioned for a little bit over$5 million.

12:57And there's a video on your Instagram of you recording your checking account going from$66 ,000 to over$2.2 million because you clicked the refresh button on it, right? Because you got the wire transfer after you sold your company. So how did you approach allocating this money in both a responsible manner while also enjoying it, right? You were probably in your 30s. You're still trying to be happy and have fun. You mentioned playing video games. I also play video games. But like, how did you go about, wait a second, I don't know what to do with this, right? I feel it's kind of like a big responsibility when people inherit a lot of money or see a big sum of money, they get scared, right?

13:33They're like, I don't know what to do. Now, before you answer that question, Jeremy, as all of our listeners know, Robert and I don't just talk about investing. We're actual investors. I've been investing for over a decade now, and Robert's been investing for several decades. And this episode's sponsor, Blossom, allows us to not only invest, but also share those investments with other investors. Yes. Blossom is a social investing app built around transparency. And you simply sign up for a free account, connect your existing online brokerage account like Fidelity or Robinhood or Vanguard or even Charles Schwab and get started.

14:07It's that simple. Unlike anonymous platforms like Reddit and Twitter, Blossom users link their existing brokerage account to the app so that all of their holdings and portfolios shared within the feed are verified by actual data, leading to richer discussions and decisions. It's just never been easier to join a community of like-minded investors focused on building long-term wealth together. And with that transparency, it's just really awesome from an authentic point. And for example, Robert, when I signed up for the app the other week, I chose to follow the dividends, passive income, and options communities for my personal feed.

14:44They also offer a one-stop shop dashboard for tracking all of your investments. They've got a dividend tracker, a dividend forecaster, sector breakdowns, and everything in between. Yes, Blossom is not an online broker. You're not investing into stocks on Blossom. They're simply a social app network for investors that want to connect with other investors. Did we mention that they have 120 ,000 active users across both Canada and the US already? So go sign up for Blossom using the link in the description of the show notes and we'll see you there. All right, let's hear what Jeremy has to say. Yeah, you know, first on the bank thing, I I had learned like a week prior to this day that the bank emails me when I get a wire.

15:25I'd never gotten a wire transfer before, but I got one like a week earlier when we drained some of the money from our bank account in anticipation of the sale. It's like, yeah, it happened like that. You just click refresh and there's all the money. Before that, though, there's about a three month period of due diligence. Basically, we had shaken hands with the buying company on the purchase price, but the wire hadn't come through. And in that period, you never know, like if they back out or they go bankrupt or whatever, you know, the deal's not really done until the wire comes through. But I had basically three months to think about it.

15:52And I got to do a lot of thought experiments. I thought things like, I could go buy a Lamborghini. What's a Lamborghini cost? A couple hundred thousand dollars. I would still have two million left or one point million left or whatever it is, still plenty. Then I was like, where would I park it? What would I say to my friends? I just rolled up in a Lamborghini. Like that period of time really gave me, you know, some like time to decompress and think about, you know, how would I really spend this money? And what I came to is like, you know, there's fewer opportunities than we all assume to convert money into happiness.

16:21You know, if you're broke and you like can't pay the lights bill, then absolutely like having more money is going to make your life remarkably better. But if you're like at a level of comfort, you know, making 70, 80, 90,$100 ,000 a year, buying a first class ticket instead of a coach ticket doesn't really add, you know, it's for sure a comfort and it's a luxury, but it doesn't really make you like internally much more happy. and driving a nicer car doesn't really like give you like a real strong feeling of happiness throughout the day. And so basically, I want to use that money to what I think is, and I still think is going to buy me happiness, which is freedom.

16:50I didn't want to buy a bunch of stuff to have to be a slave to and be like, Oh, I have to make a car payment, a house payment, a country club membership payment, I want to like build that wealth, so I could live off the growth indefinitely, and then basically spend my free time, spend all my time, however I see fit. And And so to put it succinctly, like the day I got that water, the next day I decided to do a lump sum investment. I chose about six ETFs. I dumped all in. Kind of contrary to my target date fund, I suggest now, I chose a total stock market ETF, a small cap ETF, an international ETF.

17:20I did commodities like golden oil, real estate, some international real estate, just like a few different ETFs like that. And there they sat basically since then, bringing my net worth from about$2 million back then to over$5 million as it is today. But I did go back and do the math. If I bought a target date fund on that day, I would actually have about$600 ,000 more money. Because despite all the complexity introduced, it underperformed the total pie of the market. Interesting. Interesting. And what I think is really cool about your answer, though, is the ability to buy freedom, right? I think that's what everyone's sort of working toward.

17:51And something that we really care about here on the podcast is, you know, financial freedom and what that means for people listening. It means something different for everyone. And, you know, at the end of the day, a lot of people listening right now are those solopreneurs, small business owners who are working toward maybe having that exit or selling their company or doing something big like that, Jeremy. So that's a really cool answer. And I totally agree with you, man. My big thing as well as like, you know, I'm 28 years old. I want to get to a point in my life where my investments completely offset my monthly expenses, my annual expenses.

18:21And I'm super, quote unquote, financially independent. it. Yeah. And I want to touch on, you know, not many people really ever get to see a windfall like that. And you hear it all the time with athletes and musicians and actresses, you know, or actors when they get that first big check, you hear it all the time that the athlete signs the $40 million contract. They get a$10 million signing bonus. The first thing they do is go out and buy everyone close to them a new car and they buy a few houses and they do all that. And the biggest mistake, and you touched on it, Jeremy, and I want everyone listening to make sure they really listen on this point, is when you know that windfall is coming, you need to pause.

19:03You need to try and really bridle in the excitement of that$500K,$5 million,$10 million, whatever it is, whether it's inheritance or an exit of a business, you need to bring it in for a while. And if you have to go spend a weekend alone in a cabin, go do a staycation because what happens is you let everyone around you hype you up. Oh my God, you made it. You're finally rich. You're getting millions of dollars, et cetera, et cetera, et cetera. And what happens is, and it happened to me and I want to touch on this for a moment, is you get so overwhelmed by it that you think the money is never going to stop.

19:46And that's why so many athletes go broke because the siphon can get turned off just as quickly as it gets turned on. And it's just so important for people to pause for a minute, really look at how long this money is going to last if they handled it correctly versus going hog wild and buying a Lamborghini and new houses and taking care of everybody. Because it might sound weird, but two, three million dollars, if you start going crazy with, you know, depreciating assets, it will run out quickly. Trust me, you go buy the house, you go buy the car, you go buy the boat, and then maybe a couple other things, pretty soon you're gonna be like, oh shit, what did I do?

20:23So I think it's really important for everyone to pause when they know that money is coming in. And I'm gonna tell you guys a really great story during silly bands. At the height of silly bands, when millions and millions of dollars were coming in, I made two mistakes, two very big mistakes. Not big enough to ever go broke, but big mistakes. Number one, as it started to slow down, I thought, oh, I can take this 20 million,$30 million now, and I can turn this into 200 million as easy as I turn this into the 20 or 30 million. That was mistake number one. Mistake number two is Tim Croak, my cousin, the founder of Croak Capital.

21:01One day he walked into my office in the middle of the madness, and he just sat down. And I'm like, uh-oh, what's wrong? Because he never just shows up. And he said, I want you to write me a check for$5 million right now. I'm like, what do you mean? He goes, I know you. He goes, you've never made this much money before in your life. And he goes, and I want to take 5 million away from you now so I can invest it properly. So you make$500 ,000 a year for the rest of your life. And he goes, and that's what I want you to do right this minute. And I didn't do it. I wrote him a check for$1 million on the spot, which was smart, which was great.

21:40But I just felt that I was the king of the world during that moment. and I didn't do the pause. I was so busy making so much money. I thought I was just the king of the world. Don't make that mistake because it can leave you as quickly as it comes if you're not smart with the money. So everyone listening, if you're coming into a windfall, I don't care how much it is. It's so much better to put it away, give yourself some time to breathe and think and see what happens next before you go out and start buying all these depreciating assets. I love that. One thing I learned when I sold my company is that there's no limit to how much you can put in a savings account.

22:17And you could just, yeah, if you got, you know, whatever it is, a hundred thousand, 10 million, you can just go dump it in a savings account and just leave it there for six months. Right. And I think leaving cash alone for six months, you're never going to look back and then say, that was a cash traffic mistake. The opportunity cost of six months is what ruined me. That's never going to be the mistake. But I think it does give you that time to decompress, like let the craziness die down and help you avoid making those like kind of in the heat of the moment, knee jerk decisions, which can be dangerous.

22:43Yeah, definitely. Now, Jeremy, before we jump into your new company, which I'm really excited to learn more about, I want to backpedal a little bit to your answer before Robert here was talking about a silly band days, because you said something about how your investments now pay for your life, right? You're pretty much saying that you're financially free at the moment. How is that broken out, right? I think you said you have about$5 million in net worth. How is that between if it's real estate or your target date fund or any income generating assets? Like how are you paying for your life right now from your investments?