What You’ve Done to Create Financial Freedom, Vol. 4

0:00As we welcome another Independence Week here in the U.S., freedom is on our minds. And for this podcast, of course, financial freedom is on my mind and I hope yours too. For many of us, especially Motley Fool members and Rule Breaker listeners, those two words, financial freedom, echo like a Liberty Bell. I consider liberty to be one of America's five core values. And it's on display this week when we share and riff on the dream and for some the reality of the liberty that comes from financial freedom. Some great notes from the Fool community to share out this week. Let freedom ring. Only on this week's Rule Breaker Investing.

0:43It's the Rule Breaker Investing podcast with Motley Fool co-founder David Gardner.

0:52Well, happy holiday week. especially to my fellow Americans celebrating America's 250th birthday. And what an amazing country this is and how fortunate and how blessed I am to have been born into it. And for many of you, I hope you feel exactly the same way. And I continue to take pride in the immigrants spirit that I see around me, first generation Americans among most of the great optimists that I know. And in a lot of ways, this country is built on constant waves of immigrants. my family, my various families all being part of that as well. And I think that's something that I like to underline and celebrate.

1:29Some of my best conversations about why to love this country and what makes this country great often happen with people who just got here and share with you where they came from and why they're here now. So shout out to all my first generation Americans, also second, third, fourth, fifth, and yeah, the list goes on. Got just a few stories this week. This won't be a long or deep podcast. We had a wonderful mailbag last week. I think there were seven items or so. We had a lot of stories last month. We had a Campfire Stories podcast during the month. So I feel like I've been hitting you with a lot of stories.

2:02So just a few. I want to start with this first one from Emily because Emily wrote in from Texas and tells a story that I hope gives anybody who's thinking about starting to invest. just starting. I hope it gives you some sense of hope, but also the fun that can come of it. Hi, David and Team Motley. I'm a 36-year-old woman. I'm the only person in my life and that I know in my demographic who invests outside of an employer 401k. And that's at least in part thanks to resources offered by The Motley Fool. Today, I'm a paid subscriber, but I find your free resources, especially sparkly, Emily writes, for young people.

2:47Maybe you have listeners like me from seven years ago who are looking for a place to begin. Or maybe they're like me today, still putting great value in basic education, but now having fun with personal analysis and picks. Either way, thank you for making the world of investing accessible. And dare I say, Emily goes on Fun! Please keep up the great work You are sincerely making a difference in a world That experiences great disparity I love to break the rules And your mission To level the playing field is truly admirable Here's a fun story Emily concludes I bought my first individual stock In 2020, 2021 I didn't know what I was doing But if I don't have skin in the game I don't learn very quickly And I knew that The lightheartedness of your podcast made the jump in feel less scary.

3:43I did my own research and picked a company with a future I thought I could see and understand. That first pick was NVIDIA. While I wish I had more to put in the game at the time, it's been a wildly entertaining ride, and I've been investing consistently since. win, Emily concludes. And in a nice postscript, she adds, working for the Motley Fool, a company aligned with my ethics and passions would be my life's next dream. Well, I always love hearing that, Emily. I've often said I'm after the good opinion of good people. And for our company, we're after the best people who have the most passion for what we can do that we can find.

4:26And I'm never quite sure, since I'm not directly in operations anymore, what jobs we might have on offer. but rest assured I'm forwarding your note to our hiring department. But I think what I want to underline from Emily's story, obviously to start with your first stock pick, even to make your first stock pick in a world, as Emily points out, that she doesn't really know many people who are like her that are doing what she does, investing outside their 401k. But to think the first stock you would find is pretty much the great stock of the last six years, a generationally great stock. I'm glad you picked it.

5:00I'm glad you thought about where the world is and where it's going and what made sense to you. And that's why I've always considered investing to be a very rational exercise. Rational, which sounds dry and boring, but rational and fun. And it's a devastating one-two punch. And I think you're feeling that, Emily, and I love that you're doing it. And I'm really happy for you and your story. And you clearly have made some good gains over the last year toward financial freedom. So thanks for leading off with item number one this week. Item number two is a remarkable creation from Matt the Knave. Matt, that's how you sign your name to this body of work.

5:39You just signed it, Matt the Knave. So to Matt the Knave, I want to thank him ahead of time. And for the rest of you, I'm getting to share Matt's riff off the Declaration of Independence. Yep, that one that started this country in 1776. but Matt has tweaked it, of course, to make it the rule breaker declaration of financial independence. It closely mirrors the actual declaration itself, as you'll hear, but it comes from somebody who clearly, like Emily, loves purchasing individual stocks and feels freedom, feels as if, Matt, it feels like you've been freed from the notion that you should only ever invest in mutual funds and you were having fun with this and I'm going to have fun reading it.

6:22Item number two, Matt the Knaves' Declaration of Financial Independence. Dear David, thank you for the positive impact your book, your podcast, and The Motley Fool have had on myself and members of my family. I was going to tell the story of my journey to financial independence, but the idea of writing a version of the Declaration of Independence based on the principles of Rule Breaker Investing, well, that didn't just pop into my head, it spiffy popped, Matt writes, into my head. So here you go. And I quote, I'm not going to interrupt this to give any of my own commentary. I think, Matt, this speaks for itself and deserves to be read straight from start to finish.

7:02I'm rubbing my hands together. Let's get started. A rule breaker declaration of financial independence. When in the course of economic events, it becomes necessary for investors to dissolve the financial ties which have connected them to mutual funds and to assume among the capital holders of the earth the equal opportunity to which the laws of supply and demand entitle them, a decent respect to the participants in the free market requires them to declare the causes which impel them to the liquidation. We hold these truths to be self-evident, that all publicly traded companies are not created equal, that some are infused by their founders with certain intangible qualities, that among these are top dog status, high consumer appeal, and visionary management.

7:52That to secure the fruits of these great companies, self-directed brokerage accounts are available to the people, deriving their legitimacy from Charles R. Schwab. That whenever 401k plans become destructive of these goals by limiting choices, it is the right of individual investors to roll over their funds to brokerage accounts, laying a foundation for stock purchases on such principles as sustainable competitive advantage, strong past price appreciation, and perceived overvaluation to render them and their progeny smarter, happier, and richer over time. Prudence will dictate that funds long established should not be transferred for minor or passing causes.

8:39But when a long train of underperformance demonstrates a design to reduce such funds to an absolute pittance relative to market returns, it is their right, it is their duty to cast off such mismanagement and provide a new path to future prosperity. The history of the present reign of mutual funds is a history of subpar investments and lagging returns, all having the effect of establishing an absolute tyranny over the individual investor. To prove this, let facts be submitted to a candid world. They have imposed front-end and back-end load charges. They have set excessive fees that erode the power of compounded shareholder returns.

9:27They have forsaken the proven winning strategy of buy and hold for the long term in favor of trading stocks like grade school boys swapping baseball cards at recess. They have incurred expensive and unnecessary short-term capital gains taxes through their impatience. They have cobbled together a dog's breakfast of the best to the worst stocks on the market, curbing the power of lead huskies by tethering them to teams of hobbled mangy hounds. We therefore, the representatives of the Rule Breaker Republic, as motley fools assembled, appealing to the invisible hand of the market, do solemnly publish and declare that we are, and of right ought to be, free and independent investors with full power to become owners and wear the jerseys of publicly traded companies of our own choosing by purchasing shares of stock, choose top dogs and first movers in important emerging industries as the north star of our investing approach.

10:34Buy and hold for a minimum of three to five years Add up rather than doubling down Let our biggest winners run high Until they spiffy pop so many times we stop counting Establish sleep numbers Mitigate risk by investing in a number of companies equal to our age In accordance with the Gardner-Kretzmann continuum and do all other acts and things which free and independent people have a right to do with their money, with the exception, buying dips, to make themselves and the world a smarter, happier, and more prosperous place. And for the support of this declaration, with a firm faith in the invisible hand that guides the market up and to the right, We foolishly pledge to each other our lives, our honor, and our Roth IRA balances.

11:36Full on. Best regards, Matt the Knave. Well, I said I wouldn't comment during and I didn't, but I will just leave a brief postscript before moving on to item number three. And to say, Matt, that was absolutely fantastic. Thank you for taking the time. for putting the time in to make that so, so very good. And all of the Rule Breaker flourishes show me how well you know what we're about here. And I hope and trust, and indeed, you did say at the start of your note that you were going to tell the story of your journey to financial independence, but you decided to do this instead. But I'm so glad to know my book, this podcast, and our company have been so helpful for you and for members of your family.

12:21And so think of it this way, Matt. You just paid us back. That was an absolutely fantastic piece, which I look forward to sharing again in future. Fool on, Matt the Knave. Well, when I think about financial freedom, one of the first people that comes to mind is the executive director of our Fool Community Foundation. You know, when we started the foundation several years ago, the way that I began to talk about it is that we have a lot of people listening to me right now who have some measure of financial freedom, in some cases have entire financial freedom. And The Motley Fool has done a great job over now four decades reaching people and helping, I hope, you make better investment decisions to make the world smarter, happier and richer.

13:04And one third of Americans and others around the world are financially healthy people. But that leaves a big middle bucket of people, those who are living paycheck to paycheck. And so what George and I have been dreaming of is the idea that we would have a campfire, not just with great stories of people who bought NVIDIA or Netflix, but great stories of people who saved their very first true dollar and invested it and got started. And so that's something when I think about what I've done to help create some financial freedom, helping start the foundation is top of my list. And with that said, here comes our executive director, George Haloff.

13:40George, welcome back to Rule Breaker Investing. Thank you, David. Pleasure to be here. Let's start with just a personal reflection, George. George, I've asked our fellow fools this week what you have done to create financial freedom or a little bit more of it in the year that has been. What comes to mind for you, George? I mean, as I've gotten older, I've come to realize that financial freedom isn't ultimately about money. It's about options. And it's about the ability to spend your time in ways that align with your values and bring you joy. So when I think about it in my life, I've found that buying more stuff really creates the lasting happiness that I'm looking for.

14:22In fact, it often creates the opposite. More things to organize, maintain, worry about, and ensure. My family's squeezed into an 1 ,100-square-foot apartment in New York City, so we can't have more stuff. So increasingly, I've tried to spend money on services and experience that free up the time and reduce the stress. So when you buy back a little time, you can reinvest in your family, in your friends, in your health and your community. So that, David, has become one of my personal definitions of financial freedom, having the ability to direct your time towards the people and the activities that matter most.

15:05more options, less stuff. I like it, George. You and I just spent time, I think it was a week ago, we were on the platform helping close the NASDAQ together as our compatriots at Mollipal Asset Management rang the closing bell. It was great to see you there. Had you been to the NASDAQ's market site before? That was my first time and it was very memorable. It was great. It was a very rainy day and it was impressive seeing all the people outside in Times Square looking in wearing. It happened to be during the World Cup. So they were all wearing their, you know, Argentina shirts in Brazil. And so it was wonderful.

15:46Yeah. And you looked great in an orange fool cap. But anybody who's either on LinkedIn and wants to search George Hala Fool Community Foundation or if you're following us on Twitter X, You can find Fool Community Foundation there. You'll get to see a picture of George with an orange jester cap on. George, let's briefly focus outside. Let's go bigger than just you and me right now. And let me ask you, what is the Fool Community Foundation doing? What has it been setting up over the last year to do to create more financial freedom? Well, there are two signature programs, David, with the Fool Community Foundation.

16:22One is investing in nonprofit organizations that are advancing our mission to help Americans living paycheck to paycheck. That's the Impact Fool Fund, foolishly named the IF Fund. And that's recognizing that there are already people and organizations doing this work, and we want to support them and amplify the work they're doing and accelerate it with a financial award, technical support, mentorship, and everything else to help them grow further and faster. But we also recognize that we want to work further upstream and help the next generation avoid some of the problems that we're seeing today in Americans living paycheck to paycheck.

17:00So we're launching the Freedometer, which is a tool that will be introduced in high schools reaching up to 5 million students starting this fall to teach them in a foolish capital F way the power of investing. That is fantastic. And of the two programs, I love them both. They're all our children. But in particular, I think the Fredometer, because of its debut coming up for the first time this coming school year, reaching through our partner, NextGen Personal Finance, reaching millions of high school students and really starting to teach them more about the stock market than they probably have have understood before.

17:38Something that for me has been so integral to my own financial freedom and spreading it to so many people hearing us right now. So that's really exciting. And I want to thank you, George, for your leadership there. And of course, to Sean Milliken and Clam Lawrence who are running the IF Fund, it is foolishly named because it's the impactful, but it's impactful fund. But if you just pick up the acronym, you hear IF. And so we start saying, what if? And so we're so excited about those things. What's interesting is that when you teach young people to invest, you're not just teaching them about stocks.

18:13It changes how they think about money. So saving suddenly has a purpose. Budgeting becomes a tool rather than a chore. They start asking, how do I get my money working for me? I've seen it with my own kids who have sort of been guinea pigs with the Freedometer, where, you know, instead of starting by teaching about budgeting and saving, we're starting about the power of investing and compounding. And when you start that way, when you get to the more boring stuff around savings and budgeting, there's a purpose behind it. And they're more excited to budget and save because they realize the potential that represents down the road.

18:50George, I want to thank you for your leadership for the Fool Community Foundation. I also want to mention that we have a little site that anyone listening to us, if you want to learn a little bit more about our work, of course, there's foolfoundation.org, but there's now foolfoundation.org slash RBI speaking directly to listeners of this podcast. So that's a page that anybody can engage with. And I would highly recommend if you find yourself interested and you want to cast your lot with us, join us aboard the ship of fools, foolfoundation.org. And if you like slash RBI, George, great ways to find out more about what you and I are working on.

19:27I want to thank George Haloff for this cameo appearance on what you've done to create financial freedom for the 2026 edition. George, I can't wait to hear what we're going to talk about one year from this week. It'll be really exciting to review together the gains that we have made. George Haloff, thank you for joining us during Financial Freedom Week for Rule Breaker Investing. And as a fellow American, I also want to say happy 250th to you, sir. Thank you, David. It's always a pleasure to be here full on.

19:59Thanks again to George Haloff. In fact, just as George steps away from the microphone, he's going to be with a Motley Fool member. they're going on a boat in the Hudson River together. And I trust they'll talk about freedom a little bit, probably some financial freedom as well. So sail on, George. Let's move on to items number four, five, and six. And for these, I decided I wanted to go back to the last few years of this series. This is volume four of what you've done to create financial freedom. And we've just had some great points that were made in the last few years, volumes one, two, and three i decided let me pull a treasured point from each of the last three years to provide a little bit of a blast from the past tie it all together here to close out volume fours and indeed the points i'm pulling tell their own story because there's a sequence here there's a trilogy of points and i'll just give them to you ahead of time the first one i'm kind of calling believe because i think that's kind of where you need to start believing that you can become financially free one day and then the second point is persist because through good markets and bad you need to keep saving you need to keep investing so believe and then persist and then our final point to close this week will be pass it on and again each of these is a story told before on this episodic series what you've done to create financial freedom so the first one is from 2023 volume one and starting the journey is what many rule breaker investing listeners many many fool members over the years have done and that's really something that we're here for i hope that the molly fool continues to be a leader in getting people started increasing numbers of people not just in the united states but around the world and getting them started toward what i would call investing and if you've read my book or listen to this podcast you know that's a deep and beautiful word.

21:56It's not a word synonymous with trading. It's actually kind of the opposite of that, but truly investing. I hope that we serve as a touchstone for you, for those around you, for many people who come after to get started investing. And that was true of Ken Taylor, who wrote in to this series in 2023, who tweeted what I'm about to share with you back at me. I I had just asked the question on Twitter in 2023, what have you done to contribute to financial freedom in the past year? And Ken wrote, I began, I began my investing journey. I started saving and investing at a very high rate. He went on, I'm late to the game and hoping to catch up.

22:42The greatest thing about it is, it set me on a new career path. Ken continued, when I reach financial freedom, I will be able to choose to work doing what I love, or not to work at all. Either way, it will include a confidence in being able to travel for as long as I physically can without risking my ability to cover my finances indefinitely. In conclusion, Ken wrote about financial freedom, I'm a long way from that day, but I can actually imagine it now. Whereas 15 months ago, I thought I'd never be able to retire. That's what he wrote. And I really appreciated that, Ken. You know, I think what brings a smile to my face, most of all, is that now in 2026, four years ago, you didn't see any light at the end of that tunnel.

23:34And then with your note, you did. And today, I bet today, financial freedom feels even a little bit closer. You can actually, in your own words, you know, I emphasize this word from what you wrote, you can imagine it. now you know you're still a ways from it but wow if hope doesn't pull us forward and having that hope for many people is what gets us from point a which is usually your starting point a place of less a place that's harder you're just starting to to point b a place that's easier a point of more so thank you again for sharing that ken we wish you the very best i hope this podcast i hope the Motley Fool.

24:18I hope the Fool Community Foundation can be helpful in your journey. And by the way, he didn't go into this at more length. It was just a tweet. Ken was tweeting, but he did say the greatest thing about it is it set him on a new career path. You know, a lot of times there are second order positive effects of starting to truly invest toward your financial freedom. Once we decide, we put a stake in the ground, you draw that line in the sand in front of you, you say, okay, I am now officially committing to working toward my financial freedom, a lot of second order effects start to show up. So I love that it involved a career change for you, Ken.

24:58You know, for a lot of people, a good encouragement. I've seen the positive win-win dynamics of this take hold. When they finally decide to invest, maybe they buy a bunch of stocks. I like 20 to start with, as I've certainly pointed out to many rule breakers in the past. I write about that in my book, Rule Breaker Investing. But whether you want to start with funds or stocks, however many you choose, in general, if you're doing it right, those will go up over time. And that creates a new positive reinforcement cycle because you're like, honey, let's save even more together because look what happens when we invest that money.

25:35That money starts making its own money. And so that inspires so many of us to start to want to save even more. And so it's that positive loop, that dynamic of the more you invest, the better you do, the more you want to save, the more you invest, rinse and repeat. And Ken, I know you've been feeling that. Well, that was item number four, as I said, chapter one of our little mini booklet here that I was entitling Believe. Here comes item number five, the second chapter in our trilogy. and this one comes from two years ago, What You've Done to Create Financial Freedom, Volume 2. The year was 2024.

26:13And you know, a big part of the American spirit, since that's on my mind this week, maybe yours too, I would say is that spirit of self-reliance, which puts me in mind of Ralph Waldo Emerson's famous essay entitled Self-Reliance. And I wanted to speak briefly to this because I did this two years ago, so I'm echoing myself here with this item. and I think you'll understand why in a sec. So here's a very well-known quote from Emerson's essay, Self-Reliance. And I quote, small f of course here, a foolish consistency is the hobgoblin of little minds adored by little statesmen and philosophers and divines.

26:56End quote. So I want to speak out both sides of my mouth briefly to that because taking Emerson, first of all, and his main point, his main word, a small f, foolish consistency, the hobgoblin of little minds, taking that straight up for the point he's trying to make, I think we can all agree with him, can't we? I mean, if you're just going through the motions, then with your little mind as a little statesman, you're probably not going to do anything great in this life. You may well never reach the freedom that we all hope for if you're just going through the motions of what got you here. unless, of course, what got you here is totally working, by the way.

27:34But again, for a lot of us, we realize, no, no, we actually do have to push our boundaries out a little bit more. We need to save a little bit more, be more frugal. We need to take a little bit more risk, be willing to sit through market downdrafts in order to get the great wins that come from people who truly invest, who truly buy to hold over long periods of time. That's really the way toward riches. It's not that small f, foolish consistency, that's going to get us there. We have to stretch ourselves a little bit. But now, speaking briefly out the other side of our mouth at The Motley Fool, you know, we've had a lot of fun over the years taking quotes that mention fools and foolishness and reversing their meaning by capitalizing the word foolish.

28:22so read differently that Emerson line, a capital F foolish consistency is something that I want to celebrate because it's not the hobgoblin of little minds. It's actually what gets you and me to financial freedom. So here's what a capital F foolish consistency looks like to me. It looks like you saving money every two weeks, a little bit, and then maybe a little bit more than that over time from your salary check in order to invest that probably through dollar cost averaging mechanically and regularly in every good and every bad market that you will face and you'll see both into your future and you're showing again a capital f foolish consistency of saving and investing.