The #1 Investment That Will Make You RICH In 2026! | The Money Guys

21:10I don't want to minimize that idea, but I do think that building wealth is available and attainable to all folks, no matter what your path is, No matter where your financial journey, no matter how bad it was at the start, that does not define what the end of your financial journey might look like. So you might have had different circumstances that caused it to be more difficult for you. But I still think even for that person, they have the ability, whether it was environmental and circumstantial or it was their behavior. I used to run up credit card debt and live on more than I make and, you know, make all these bad decisions.

21:42I do think that there is an onus where they can change that, where they can actually improve their financial life. It's a mindset issue. If you look, we all hate villains, but I'll tell you villains and unfortunately victims don't come out ahead. So if you, if you self-define yourself as a victim that this system's built against you, you'll never get yourself out. Whereas if you can put the mindset that, yeah, okay, the system's hard, but I believe, and these guys are sharing some of the tools and take an active role to be the hero of your own story, I really do believe anybody can do it. And you just, it's a mindset thing.

22:18Don't let, because we've done shows. We've got a show that I'm so excited it's coming out because where we said, is it hard, truly harder for the new generation versus the baby boomers to get ahead? And we found out, yeah, there are some things that, holy cow, we ought to be pretty ticked off about what's happened in education. And even some of the things in somewhat in housing, it's not as bad as what happened in education, But still, there's so many new things with technology. I mean, if you saw what it was like to try to invest when I came out of college, you had to go through a broker. You couldn't buy index funds.

22:47It was just completely a different game. So much has happened. Now you can go online. You can do everything. It's instantaneous. You can do something.

22:55Graham Stephan:Do you think AI is going to make it easier or do you think that's going to mislead a lot of people? Yes. I think it's both. I think Bo is exactly right because we've even found, I mean, it's amplifying what we can do for clients. It's not taking us out. It's going to make us better. But I do think if you're a person, and this is something I've tried to figure out. I'm not trying to change the subject to AI, but I think people ask us all the time, like, you know, when you're trying to do Roth conversion strategies, how long does that take you to figure that out? And I'm like, well, I can typically in 45 minutes of looking at your portfolio, I can have a pretty good plan.

23:27But it took me 15 to 20 years to kind of really see, you know, all the things that go into all the factors and all the variables. so you know it's 45 minutes but there's 15 years of experience or 30 years of experience now where 15 years and 45 minutes i am i think ai is going to bridge a lot of that stuff but there's still a lot of ghost in the answers meaning the information we've even been playing with some llms and there's just there's so much confidence in bad answers that if you don't have the experience to actually see what the output was to kind of navigate i do hope younger people don't lose the ability to to be able to see what is, how to think through things because we outsource intelligence only to the AI models, because I think that's going to be scary for our kids and the younger generations.

24:14So I think that technology and artificial intelligence will make it, yes, perhaps easier to invest, easier to build a portfolio, easier to like gather information. But I do think it's also going to create the opportunity to be distracted, as most other technologies have done. So there'll be pros and cons to it. it'll be interesting to see how it shakes out. Haven't y 'all noticed that when you talk to any of the chats, or, you know, ChatGPT, the Grocks, and they all just trying to make you happy. So, I mean, they have this level of confidence. Yeah, but they are trying to...

24:43Graham Stephan:Gronk expert has been really good. Yeah. ChatGPT is awful. In terms of just a confirmation bias, wanting to say what you want to hear. Yeah, Gronk I found to be pretty objective, but ChatGPT yesterday, I was trying to figure out at what point the S &P 500 would have to fall for me to get a capital call on a box spread. Okay. And it was so confident. It was like 72%. I'm like, that's incorrect. Did you check the math on it? Yeah, I did. Okay. I knew that was incorrect. And I said, oh, sorry. Actually, it's 68. I said, no, that's not correct. Oh, it's 84. It just kept changing. It's just random.

25:14Graham Stephan:And I said, no, it's 90 % plus. He was like, oh, yes. My apologies. I was interpreting incorrectly how you phrased the question. It's actually like 94%. I'm like, that's too high. Oh, actually, it's unusual. And it would keep saying, oh, you're right. Oh, great catch. Oh, I'm glad. And I'm like, I'm not supposed to, you're supposed to catch it. That's why you do have to be careful because the confidence that it comes out of the gate with is really strong. And there's a lot of ghost in those numbers still. But what's interesting is that now brokers are implementing this new AI into their system where you could tell it what you want it to do.

25:45Graham Stephan:And it'll execute whatever trade on your behalf. So if Jack wants to buy call options on Amazon at a certain strike price, he can literally just type it in the chat and it'll go and do the thing that he's describing. Which brokerages have that? Public and Robinhood are launching that. Interesting. But I do think one of the things, so when I hear you say that, I was like, oh, that's really neat. That's super interesting. At some point, Jack would have to decide, okay, should I be buying call options on Apple? You know what I mean? Just because you can doesn't mean you should when it comes to that financial stuff.

26:18That's like a really neat thing. It's probably like a cool value add, assuming it makes sense for me doing that. What I wouldn't want someone to do is hear that and be like, oh, I'm going to go get that. I'm going to start buying call options. If you don't understand what that is or how that works, that might not be the thing that makes the sense. It's going to toss you like Chachi B.

26:33Graham Stephan:Great call. I totally agree with this. Do you think Apple can buy you right now? Yes, yes, yes. You're the next Warren Buffett. Graham said that he thinks selling covered calls is the dumbest thing ever. What are your words on this? I said it was pretty dumb. He says selling covered calls is pretty dumb. That's a broad statement. How far out of the money? There's so many variables here. Like very little out of the money, but within like a month, two months, give or take, you know. How is that dumb? Because you're picking up pennies at the expense of the long-term stock market growing. And there's no such thing as free money.

27:07That was my question. Whenever someone asks us, what do you think about this? I always default back to why. Okay. Selling covered calls. Why do you want to sell covered calls?

27:16Graham Stephan:I would say there are certain stocks that I'm like hesitant on buying. For example, let's just say Chris Camillo says you should buy Bloom Energy. Okay. I'm like, well, I don't necessarily want to do all the due diligence into why I should buy Bloom Energy, but maybe I would like to have the appreciation of this Bloom Energy. And so I go and I buy 100 shares of Bloom Energy. But the only way I justify myself to buy this 100 shares is because, let's say, I can get 3.5 % per week on weekly call options if I want to sell covered calls. That's a good enough hedge where, hey, look, if it does end up going down, do I think it's going to go down on average more than 3.5 %?

27:52Graham Stephan:It could. Could it go down less than 3.5 %? It could, but still I have some appreciation of a stock that he told me I should buy. I get to watch it. I get to be more like involved with the grip. Okay, so let's play the other side of it. You do it, you buy the Bloom Energy and you're selling this and then Bloom does some exciting stuff and it takes off. And it did. And it just... It's$300 now. And your position, you know, it gets called away. Would you buy it? Well, I bought it kind of all over the place, but let's just say like my average, I don't know why he's laughing because I made more money on Bloom Energy than him.

28:25Graham Stephan:So you go ahead and keep laughing. But let's say that it gets called away, right? It did. Forever, you're going to be sitting in that position where you're like, man. Y 'all are just like we are. That's crazy. I'm totally picking on each other. It's insane that he's laughing because I've made more on Bloom Energy than you make on Bloom Energy. Dude, I'm up like 26 grand right now on my 200 shares I'm holding. I'm up more than that. Oh yeah, you are up like 60 grand. But y 'all are making my point from something I said earlier. Do you want a sports fish or are you trying to feed the family? Because y 'all are - Yeah, I'm up way more than this.

28:54Y 'all are no different than two buddies who go out fishing so you can tell fishing stories on the fish that you almost caught and it got away. Whereas I'm telling you, there's a huge difference between investing versus speculating. Some of this stuff, this is speculative. It's hardly, I mean, sure,

29:09Graham Stephan:because you're trying to, but you're making money off of time. Sure. Which is what you're doing with investing. You're not, because - Oh, explain that. Explain theta decay, please. Explain that. Can you do it? understand that when he buys a stock, there is a risk that it goes down. So if he's making 3 % in a week, it could very well go down 6 % in a week. And he's net negative. I don't understand that. I absolutely do. Your position is more bullish than my position because mine is actually a hedge against the position. That's why I'm up so much. But you were speculating more than I was. No. Yes, you were.

29:42Graham Stephan:I bought in cheaper. So one of the questions I'd be asking is like, okay, what's the thing you're trying to accomplish here? What's the goal you're want your money to be doing for you. In the instance that you're describing, that would not be one that screams to me, oh, selling covered calls makes a lot of sense. Where a covered call position might make sense is if you're an executive who has a highly concentrated stock position and you want to figure out a way, okay, I can't sell this position because of embedded gains. Perhaps I'm going to do some sort of strategy where I want to protect my downside, but I also want to recoup some premium on the upside to cover the cost of the put.

30:13Something like that. But in your scenario, if I was trying to just make a little bit more money on it and I was bullish on it, I would maybe just buy a different stock that would do something differently. Because I agree with you, just because you can make some money doing something oftentimes doesn't mean it makes a lot of sense. You can go walk around the freeway and pick up cans and you can bag up all those cans. You can spend a couple hours doing that. You can take them in and trade them in and get the recycling money for that. But is that a good use of the time? And was that a good use of mental calories?

30:44I don't think it's all worth the hassle factor because look, I've had this, this has happened to me so many times in my decades of investing. Like I'll meet a neighbor and he'll find out he's over here calculating returns. I've had a neighbor find out I'm a financial advisor and they, and they're like, you know, what stock do you recommend? And then, you know, they're talking to me, you know, whether at the time it's Fitbit or whatever the latest, greatest thing is. And then what's always funny is I tell them once they get to know me, I'm like, I buy index funds. I mean, that's what I actually do with my money is I buy index funds.

31:14And what's funny is I watch the education is that, you know, after we get to be friends in five years in the future, and they go, you know, I looked, I started looking at my annual return of all the trading I was doing in individual stocks. And then I started looking at what I was making on just the total market return or the total market or the S &P 500 index. And I think I'm making more money on the S &P 500 or whatever. And I'm like, yeah, it's amazing. And you didn't have to stress out and think about everything that was going on. And that's the reality I try to share with people. Because even if you, and this is, let me play devil's advocate.

31:46Because even if you weren't selling the covered call, where you got it taken away from you, if it goes, shoots up, I've experienced, because I even have a story back in 2008, I called all my buddies and I was like, look, Apple stock right now is trading at a price that is the equivalent of what their physical assets. I'm not talking about their actual IP and intellectual property. I'm talking about the campus and other things. This stock has been beat up so bad. I was like, this is the biggest no-brainer. We should buy some Apple stock. So me and some buddies, because I don't buy a lot of individual stocks.

32:21I'm an index investor. We bought Apple stock. I, after, and let me ask you, this stock you bought, would you have sold it if it was up 200, 300, 400 %? Would you have taken your money?

32:33Graham Stephan:Probably not. You would have kept it, you would have just rolled forever. I honestly. Ride or die. have never really sold stocks. The only thing I've ever sold really - So you have permanent portfolio on everything? Except for Robinhood. Dogecoin? Except for Robinhood. And Robinhood, because I had, yeah, because I, that was a different - You're the type, Jack, you're the prospect that we would get. I want to get back, don't let me get off topic on this. Margin called$10 a share for Robinhood. Yeah. Jack, it would be the prospect that comes to us and it looks like a quilt of his life. It's the quilt of Jack's wonderful life because you can see what he was doing in every decade of his life.

33:05Graham Stephan:Three and a half percent. Three and a half percent. Guess what time? How long? This is one week. If you sell a call, 25 cents out of the money on Robinhood weekly calls, you can get three and a half percent. This already, this is just linear growth, not even counting compound interest. What price? Times 52. This is 185 % return on Robinhood over the course of a year. What price did your balloon get called away at? It got called away at a few different prices. I mean, just like I had quite a few different options. It was like 88, 92, 94. I was making money on all of it. What's it trading for now?

33:38280. 280 bucks. I would argue that the long position you missed out on did not compensate for the ROI you got in the covered calls, right? Like had you held it - But I'm not, I'm not observing.

33:50Graham Stephan:I'm just observing it in terms of what is the growth expressed as a percentage. Sure. And so like, and also I had 200 shares because guess what? It started going up and I had 200 shares that didn't get called away from me. Like, you know what? I'm just going to ride it out. And I did. And now it's at 200 and whatever dollars. And so I'm just saying, a company as solvent as Robinhood, do you think that it's going to zero in the next year? I haven't looked at their financials. I wouldn't... Probably not. I wouldn't say... I met Vlad Tenev. We had him on the podcast, the CEO, founder of the company.

34:17Graham Stephan:Everything seems totally great. Love the company. Have used the app. I invest on the app. It's phenomenal. And so if the company doesn't go to zero, assuming that premiums stay the same, you'll get 185 % return in a year. But is this the best use of your time? This is the point. For me, is it the best use of his time to be hunting for a coffee that's a dollar cheaper? Right? It's the hunt. Right. I love the hunt. But this is a hobby. To buy five of those shirts because they give you at checkout an additional 5 % off when you add other things. We were talking about that before the episode. Let me bring it back to why I don't love individual stocks.

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36:06Graham Stephan:Again, that link is down below in the description. Thank you so much. Now let's get back to the episode. Let me bring it back to why I don't love individual stocks, because I just gave you the perfect example of Apple. We got in in 2008, dirt cheap, me and buddies all threw a few thousand bucks at it. When it went up threefold, I jumped out because I was excited. I made 300 % in a short period of time because when the market recovered, it came back quick because everybody else caught on that, hey, Apple's a pretty good company to own. My other buddy, I think he might've held on for four times.

36:36But the thing is we all dropped off. One of my buddies, he still owns it. He never got out. So I know he might be the jack. So what does he have a couple million groups? It's worth, no, because I think he put in 5 ,000 bucks. It's worth over half a million dollars from that one holding. Wow. So, I mean, but I'm telling you that that sounds great, but the majority of us would sell. You would sell.

37:00Graham Stephan:This is not anything that I would recommend publicly because it's like you need to. This is purely logic. No emotions whatsoever. What Jack is trying to say is that he's able to make over 100 % a year with little downside if he keeps doing covered calls. Right? Because if he gets the shares called away, he could always buy a little more. Yeah, I'll just buy a hundred more shares. But the problem is there is some long-term because you're getting called away on a short-term holdings. So you're paying ordinary income tax rates instead of the long-term capital gains. But okay, when you buy a position that actually does go down, that doesn't come back and you made a poor purchase, you can't get those dollars back into the Roth.

37:38My opinion is if you're going to do those sort of strategies, I think the losses would likely be more valuable than sacrificing Roth dollars you will not be able to replace. Roth, you only get$7 ,500 in there at a time. You make one bad call that loses you$20,$30,$40 ,000. That's like years and years and years of contributions you won't get back unless you have another, you know, investment that hits. I would argue the tax drag is something I'd factor into my calculation and I'll consider it my tax.

38:04Graham Stephan:So even QQQ, right, for example, you can sell daily call options on QQQ. And if you extrapolate that over the course of a year, it's like a 26 % guaranteed return. If you were holding QQQ in your Roth IRA, Ray, why would you not guarantee a 26 % return as opposed to what other way you could get that? It were a guaranteed 26 % rate of return that was an assured thing. Why wouldn't every fund manager in the world be doing that? It's probably a volume thing. Investor, right? Because they do cover call ETFs. They certainly do, but not ones that are guaranteeing 26 % rate of return. Because once an inefficiency exists, we operate in a capital market that adjusts pretty quickly.

38:44So yeah, inefficiency can exist. but once inefficiencies get exploited, they then become efficient. So I'd argue, I don't think something like that has staying power, where even if you made 3.5 % for a week, and if you did that for multiple weeks, I don't believe that that would sustain throughout the course of a year. So I think it's illogical and irrational to assume that you could extrapolate 185 % rate of return. No different than if you, and look, it's not the exact same thing, but if you go to a casino and you, all right, I hit red, I hit red, I hit red. Well, if I did it a hundred times, think about how much money I'd make.

39:15That's not the way that it works.

39:17Graham Stephan:I mean, you can get three-tenths of a percent daily on QQQ calls at the money, which is not too bad. But you do realize, like you said, you make 100, was it 185 % or? Yeah, on Robinhood selling covered calls. Bo's exactly right. If you could actually do that repeatable, you know, in a guaranteed way, people would be making a, you'd be able to do that. And there are structures. Carter brings to us all the time these crazy structures, you know, that you can set. he's going to be mad that I said the word crazy, but he's, he doubt, he looks at those things where they do try to play these crazy arbitrage situations and they're interesting, but it's not something, I don't know.

39:57Maybe this is where I'm too boring.

39:59Graham Stephan:The reason why billionaires don't do it is just because it's a strictly like volume problem. There's not enough volume. Well, not millionaires. I agree with you. A lot of millionaires do. Yeah. I mean, a lot of people retire just doing the wheel strategy. What's the wheel strategy? You sell a put and then if you get a stock put to you, then you sell a call to get it called away from you. I've never heard of that. I would ask you to track your time on all these things too, because I think if you add the time element to all these hobbies. It seems like it's a hobby. This is something you enjoy. You're not doing it so much for the economic outcome.

40:27You're doing it for the enjoyment of it. Because this is the same problem I have when people try to compare my index investing to like real estate investing. I'm like, yes, levered debt is going to do incredibly well compared to an index fund, but let's put into how much time you have to put into the real estate and everything. The time that's going on these strategies is worth something too.

40:42Graham Stephan:Yeah, I sell calls on maybe 5 % of my portfolio, 10 % of my portfolio, transparently. So this is just playmine. And yes, I have lost out on a lot of gains when stocks have gone up, but I've also decreased my level of loss when stocks have gone down. And if you extrapolate this as a return, or maybe expressed on an annual basis, I've beat the market, like consistently since I've done it. Not counting Bloom. I'm good. Yes, counting Bloom. I made money on Bloom. I don't understand. Not the shares that got called away, though. I did make money on the shares that got called away. 3%. yes, in a week.

41:15Graham Stephan:How is that bad? 3 % in a week is 150 % a year. It's there up to 100 % since then. But I'm talking compared to like the average stock market. Here's what I can't wait to see, Jack, because y 'all have already put yourself in a box because you said you're going to let us see your portfolio at the end of the show today. Sorry. So we're going to get to look at your portfolio. You've also, because we've all gotten friendly, I kind of know what you make to a degree. We're going to judge you hard if we know how well you're doing in life and we look at your portfolio. We're expecting to see magical stuff because otherwise - Why don't we do that right now?

41:42Because otherwise, I want to feel like you're growing.

41:47Graham Stephan:You have so much capacity to grow with your good income. So the money guys react to my stock investing portfolio. All right. Let's go. Okay. Let's look at this. Now, can I ask you a question, though? Yeah. You shared last time we got to hang out. I kind of know what your income is. This account is great. Multiple. How long have you had that income that you shared with us last time we got to hang out? What did I say my income was? Well, I can't. I'm not going to say that. I'm not going to say that. I'm not going to say that. Maybe a year. Here, you want me to write something? Maybe a year and a half.

42:21Okay. Okay. Okay. Yeah. Okay. Because I want to see a multiple of that. Oh, I invest. You understand?

42:27Graham Stephan:I don't spend any money. So, yeah. I mean, you could look. This is like my gains over time. Mm-hmm. See? I don't spend any of my money. Most of my money is in this, or not that, but like the Vanguard equivalent. And Jack, let me ask you another question. Yeah. win these stocks on volatile days, like right here. I mean, if there was a stock, none of them are having huge days. But if you, if you lost 20, 30 % in about a three-day cycle, do you emotionally feel like you get, you know, is it, is it feel like you got kicked in the stomach? Do you actually have emotional reactions to what's going on in your portfolio?

42:56I don't, no. So as I'm looking at this, right, like I'm just looking at this is specifically your taxable account. So you were kind enough to let us look through all the accounts. I was expecting to see a bunch of really, really crazy stuff in here. it's actually a bunch of household names the lion's share of what you have is it's even spy yeah or in like you know low-cost etf indices which i think is fantastic uh this is like vanguard yeah right it's the vast majority and so you just dabbling so like yeah you have you're dabbling you have some individual stock positions but at least in this account i'm going to say relative to your total wealth relatively immaterial so this doesn't give me a lot of pause.

43:35Like I'm not, I'm not super concerned in this account. And these names that you hold aren't really frightening names. They aren't things that I think, um, that I think I would be afraid of holding. I do see some losses in here that perhaps if I were worried about my tax bill and stuff, I think maybe clip that loss and find something that seems a little bit more attractive. Uh, I know he really likes that one though. So which one is it? You could say the names of the stocks, not the amounts. Oh yeah. Uh, Robin hood. That's the one that you really super bullish on. Your position right now, though, pretty attractive loss in there that could be used to offset some of these future capital gains.

44:08You can see how much I've lost. It's 20, you're down 22.5 % on that position. Might be a great, again, might be a great little loss to clip just so that way, in our world, loss is a great, we don't love losing money, but whenever losses are present, we love taking advantage of those. So that's something there. Can I look at something? Yeah, I want to go, I want to get to the Roth because that's the one I think that's going to be. I'm just going to say this. I would say, I couldn't do the math because it was moving really quick before me, but it looked like three quarters of that account that we just looked at was pretty much in what I'd call tried and true, you know, index fund type or stocks that are in the index or the top performers.

44:48So, you know, in the top -

44:50Graham Stephan:It's tech heavy. It's super tech heavy. It's already, you know, because the S &P 500 is already probably highly concentrated in a lot of these stocks that you already have. I don't think you're as, you're acting like you're an exotic and it's actually pretty, pretty plain vanilla. Yeah. In a lot of ways, if you look at the 75 % of this, 80 % of this is doing the same thing. So then I'm back to my point of what are we doing here? I mean, it's the hassle. And I'm fine with that. I'm fine with that. Well, I actually have made money on it. Yeah. Like a decent amount of money. There's a number of people that made money gambling.

45:23There's a number of people that make money sports betting. There's a number of people that do those things. You can make money on hobbies. I'm not disagreeing with you there, But what I'm suggesting is it's more of a hot. You get utility out of this. Totally fine. I was nervous. I was going to look on here and see a bunch of like penny stocks. No, it's much more.

45:39Graham Stephan:I wouldn't do this strategy on a stock that I'm not bullish on. What would you rate his portfolio out of 10 from aggressiveness or for quality of just overall for his age? Let's say, yeah, quality of portfolio, considering my age, my income, the industry I work in, etc. How much time are you spending on this? I know I keep asking that. Honestly, none. No, but you are spending time because you obviously, you've got stuff all over the place. I can show you my Schwab screen time. I mean, maybe it's like, maybe it's five minutes a week, 10 minutes a week. Okay. I literally, I don't even look at the numbers.

46:10Graham Stephan:Like I just hop on and I just like, I sell a call if I need to. I'll buy something if I have some spare cash. I'm going to give you, I'm going to give you a seven and a half, eight, seven and a half, eight. And I'm also wanting to disclose this portfolio is probably going to perform pretty well because it's very aggressive. Right? So when we see a year like last year, 2025, where the market did really, really well, I'm willing to bet this portfolio did really, really well in that kind of year. Now, the things I'll pick on is also, okay, I do see an individual 401k, but there's no money in that account.

46:40There is a SEP IRA where there's some money in. You strike me as with your level of income, that solo 401k should have been fully loaded. It will be, yeah. And that SEP IRA will probably disappear, right? So then we're going to open up some opportunities, do some backdoor Roth contributions, that sort of thing. because, uh, yeah. And look, you've been safe and good. This is a big. Yeah. Cause that's the other thing. How old are you again? 27. 27. That's a great, it's a really, really solid. No, you're doing great in the fact of where your age and where the assets are at and your Roth, you probably haven't been able to make contributions because of that.

47:13So, but we're about to change that by doing the solo 401k. Yeah. So there's some account structure stuff that I would totally want to clean up so you could do backdoor Roth contributions and then really give it to the man legally by loading up that solo 401k. Maybe y 'all are enough, y 'all have enough profitable profitability. They could potentially do like cash balance and other things too.

47:35Graham Stephan:Graham would attest that like, I have never been a big spender. Like I have never spent money on anything. Like the most expensive thing I've ever bought was my car, aside from my house. And I bought a watch. Is it a very nice car? It's a Tesla. Okay, yeah. But it's not you didn't go out and buy a Cullinan. No. You bought like a reasonably nice car. Yeah. What has he got? Look at his unrealized gain loss. I'm assuming, is this year to, is it? Okay, now I want to see realized gain loss year to day. That's going to be on here, right? Yeah, that's just interest and dividends. It doesn't show losses and gains.

48:07Because I was, what I was trying to see is how, was it tax inefficient? Like, you know, so one of the things, you know. It was probably tax inefficient. Yeah, a lot of people, they like trade and they're like, it gets super exciting and then it gets to April. And one, if they have an account, they got to pay their account an extra X number of$100 ,000 because of the 4 ,000 transactions they have to put in or at least 4 ,000 transactions they have to monitor when they file their tax return. And then there's usually a huge capital gain that they thought, you know, if they've had success and they've not been harvesting the losses.

48:37So I was trying to see where that existed. But in full disclosure, I'm going to give you an eight. Eight out of 10. Eight out of 10. What would take it to a 10? Some more well thought out strategy, right? Like explain to me how you defined your allocation. Cause what I really see is it's a lot of us fortune 100 fortune 500 tech companies, um, which is fine, but there's a lot of concentration in the singular asset class. Uh, perhaps for a portfolio that size, I'd want to see something a little more diversified.

49:08Graham Stephan:So my, my response to that is I think that the, the asset class that I'm in right now is like tech is going to just grow faster. And, and for me, I I'm very, very, since I've been investing for so long, I've weathered so many ups and downs. And I also assume every single time, cause I don't dollar cost average. Whenever I take a distribution from the company, let's just say I take$10 ,000. I immediately take 2000, put it into my like checking account, 8 ,000 immediately into the investment account. How often do you take distributions? Maybe monthly, month and a half. That's dollar cost averaging.

49:39You said you don't dollar cost average. That is in fact dollar cost averaging. Okay, sure. Yeah, yeah, yeah. But I

49:45Graham Stephan:basically just buy as much as I can and I buy as quickly as I can. And then if taxes come up and I need money for taxes, I'll even sell my investments in order to pay my taxes. Here's the thing though, if you extrapolate this over a long enough period of time, then it's a winning bet. If the market went up that year. Yeah, if it went down that year, but if on average the market goes up 10 % per year, you're taking a 10 % advantaged bet. It's like you're being the house with a Yeah, but you said you love... Sequence of return does matter, though. You love 3.5 % guaranteed so much? If you just park some of that money for that tax bill in a 3.5 % high-hield account, No, but he likes 3.5 % a week.

50:20Yeah, it's in a week. Okay, fair enough. Fair enough. In a week. Not a year, man. That's a strategy. That's a strategy. I do think that there's room for improvement on structure, which you already know, though, because you just talked about...

50:31Graham Stephan:I think the structure is probably... And you see, like, last year, you know, again, we are bullish on the same things that you were bullish on. But we do still love like international holdings. We do still love small cap. And like, if you look this year, especially the first quarter, we saw volatility in the S &P 500. It was wonderful to have those parts and pieces in the portfolios because they've outperformed. They outperformed last year, outperformed this year. So again, it's an eight. I would just love to see more like thought behind it. It looks like the thought is, I like this today, I'm going to buy this today.

51:02Graham Stephan:Yeah, and then just hold on to it forever. And then just hold on to it forever. So speaking of investments though, the market has hit today officially an all-time high at the time we're filming this right now should investors be worried about this do you know how i mean i i figured y 'all gonna ask something like this i should know the exact number but i don't you realize we've had like i think it's 200 plus all-time highs this decade alone i mean in the six years yeah so i mean when markets run through bull markets so you know you start going up The market's up much longer. Like bear markets typically are 11 months, but bull markets run for much longer.

51:38So you hit all-time highs over and over again.

51:41Graham Stephan:Okay, but this chart is pretty scary. This is going viral right now on Twitter. And the caption is, only one question. Who's the exit liquidity? That's a spooky looking chart. It is a spooky looking chart, but 1984, right? So we're looking at 40 plus years of data right there. That is the economy though. That's what's happened. And think about where U.S. GDP is today relative to where it was in 1984, right? It's a very different thing. The pizza pie gets bigger. Should you be concerned about the market hitting all-time highs? If you haven't thought about your asset allocation and having a portfolio that matches your risk tolerance, your risk capacity, and your unique financial needs, then yeah, you should be worried about that.

52:22But you shouldn't be worried about that before the market at all-time high. Warren Buffett is famous for saying, be greedy when others are fearful, fearful when others are greedy. What you never see Warren doing is when markets hit all-time highs, he doesn't dump his portfolio. He doesn't sell his positions. He may store up additional cash when he thinks there aren't things that are attractive, but he's not being afraid. He's waiting for that moment where he actually can be greedy when the opportunity persists. So I think if you're in the right portfolio, well-structured, well-thought-out, right asset allocation, right asset location, the market does go down from here, 10, 20, 30.

52:57even in 2008, 37 % over the course of a 12-month period, the right portfolio should be designed to weather that well for your unique circumstance. Look, I get the fact that a lot of this is concentrated in some of the biggest AI companies and technology companies right now. What I'm trying to figure out, just being honest, because we don't, by the way, I'm going to be transparent and tell you, I don't have all the answers, but you should also know everybody who tells you they do with the confidence, they don't. I'm fully in the system and I can tell you they are they are probably trying to sell you something if they act like they have it all figured out.

53:32What I'm trying to figure out for myself is when you see this big run up, I'm old enough that I've been around for the personal computer coming on the scene. I've been around long enough when web, you know, and the Internet changed the world. And here we are in a new disruptive technology with AI coming on the scene. I'm trying to figure out, is this a, you know, what everybody's worried about is a bubble or are we truly at this level? what Elon was alluding to at this new, new disruptive side of things where efficiency and profitability gets expanded at a level we haven't seen. It's kind of like, you know, the, the horse and carriage compared to what happened when you, you got transportation and then take it up to another level when you got air transportation, we don't know yet.

54:17And that's the part I trust the economics of, of an index fund more than I do a manager that we'll see. And I And plus, we're diversifying. I mean, I will tell you, I just got off. I had a client meeting right before this interview where the client, you know, when I got in the meeting, I thought he was retiring in the next two to three years. So we planned on having a lot of heavy discussions on. Let's start all-time highs right now. Let's start bringing down the risk profile slightly. We're not doing apple cart turnover, exactly what Bo said, but we're going to bring it down slightly. He let me know.

54:49He plans on working for many more years, so we're going to let it keep rolling. but you should make sure your allocation is good so that before something big happens, you don't have to react. You're good before, during, and after. That's what diversification is supposed to do for you. I'm always amazed that people think that they're going to do, and that's why I always pick on the Voo for Life. I love the S &P, but there is too much of a good thing is if you think that you're going to do this until you're 55, 60 years old, and you're going to slam your retirement into the ground and just, you'll be okay.

55:20That's scary to me. I mean, And I made the analogy of air transportation on purpose is because if you flew commercially on the pilot, got you up and then drew through you into the ground as fast as possible, you would never fly commercial because you'd have a fear, a phobia of it. But what you want to do is you want to glide path this thing down, live your best life and not have to react no matter what the market, because there's already gonna be weird stuff that happens to you emotionally when you leave the workforce. So you might as well make sure that your money can actually keep you safe while you're kind of going through the ups and downs of the volatility.

55:52Graham Stephan:Who do you think should manage their own portfolio? This episode is in partnership with Airbnb. Graham and I are always traveling for the podcast. We were just in Nashville filming a few episodes there. And let me tell you, the food was incredible. I had the absolute best appetizers I've ever had. There was this dough ball and these steak skin potatoes. It was incredible. But let me ask you this. Do you ever think about your place back home when you travel? When you're gone for days or even weeks at a time, you can list your space on Airbnb so it works for you instead of just sitting empty. And if you've ever considered listing your space, but you weren't sure how you'd manage everything while you're away, well, that's exactly where Airbnb's co-host network comes in.

56:28Graham Stephan:With this, you could partner with a vetted local co-host who has hosting experience and can help take care of the important details for you. A co-host can manage the reservations, communicate with guests, and handle the on-site logistics so everything runs smoothly while you're traveling. If you have upcoming travel, you probably don't think twice about your home sitting empty, but you could bring in some extra cash while you're away. I kid you not, a couple years ago, before I had all of the rooms in my house filled up with roommates, I actually listed a room on Airbnb and the entire process was genuinely so easy.

56:58Graham Stephan:The extra cash was amazing and I was genuinely just so surprised at the simplicity of the entire process. If you're trying to make some extra cash on the side, I couldn't recommend Airbnb more. If you're ready to host but need a little bit of help, find a co-host at airbnb.com slash host. Who do you think should manage their own portfolio? I think there's a lot. A lot of people. It's really interesting. We're like, oh, well, you're a financial. He's pointing at it. I think Jack should. A lot of people think, oh, you guys are financial advisors. You must think that everybody should hire a financial advisor.

57:25No, not the case at all. There are a lot of people out there that are incredibly capable of managing their own portfolio. We actually say for folks that are just starting out while you're building out in your 20s, 30s, really until your assets hit a critical mass to where complexity enters in and you have $500 ,000,$600 ,000 invested. There's so many great resources out there with YouTube channels and blogs and articles and self-management is not that difficult. And perhaps AI is making it even easier because now you can get real-time feedback on real questions you have. Answers aren't always right.

57:56So you want to make sure you kind of understand that. I think that a lot of people can self-manage up to that point, but generally speaking, one of three things happens in your life. either the gravity of your decisions is so great that you feel uncomfortable making the decision alone. Meaning like, okay, if I make a 10 % boo-boo on$10 ,000, I didn't change my life. I'll make a 10 % boo-boo on a million bucks. Okay, that's more significant. I don't know what I don't know. You know, my tax return used to be two pages long and I had my full, now I've got a different compensation structure. I have a rental property.

58:28I have all these other things going on where complexity has happened or I'm just so busy, stuff is falling to the back burner. Meaning like, I know I'm supposed to rebalance, but I just haven't had time. Or I know I'm supposed to think about my allocation, but I haven't looked at it in two or three years. I think if any of those three things happen, that's an indication. Maybe I'm not at the point where I can self-manage. And a lot of times, it's not even people who can't do it. It's people who aren't able to do it based on their current station and circumstance in life. The fourth one I'll throw in there is because we have some pilots that are clients that I told them in another life, you should have done this for a living.

59:04Because I look at it, I mean, you get, they become clients. Well, they're prospects first. Their asset allocation, superb. Their portfolio is 10. You see, they've run all the Monte Carlos. They've done all the tax planning. You're like, you guys are geniuses. You're brilliant. And then, you know, and I'm honest enough when I was doing prospect calls with these guys, but you don't really need us. And then they let me in on, you're right, but I'm worried what happens when I'm dead. And I'm getting old enough that I'm, you know, I don't want to, I don't want my wife or my spouse to be concerned about who takes us out.

59:37So we've actually had people hire us who were doing a superb job of self-management, but they just wanted us, we were their insurance policy in case they left and they wanted to make sure their spouse had somebody in the background that could, you know, that thought like they did about money. And what should those people be investing in overall? I mean, we love index funds, low cost, well-diversified, broad index funds. I think if you looked at the portfolios we managed, the lion's share of those are there. Now, there are areas where we do think that inefficiencies exist, where maybe an active type fund might make sense, but for the vast majority, low-cost index funds.

1:00:13And the self-managers that are young that are just starting out, I think things like target retirement index funds are a great solution. The reason, Bo gave the game earlier, we love index funds because we don't talk about this a ton on the show is just the market because of how fast information travels everywhere now it's hard to think you have knowledge that somebody else doesn't have so i think just buy the market the efficient that's why when he talks about efficiency like if you could truly do a trading strategy that generates 100 plus percent guaranteed a year it would disappear so fast i mean it's like we even because everybody everybody i mean we've even seen it because we really did have people present to us the crazy arbitrage that you can do on sports betting.

1:00:57And it's true. You really can make great money for a moment because their systems are so smart that they'll start limiting your bets as soon as they start realizing that you're playing those type of arbitrage trades, the sports betting sites. It's the same way with normal investing too. If you really had the better mousetrap, I just don't, I don't, I think the exact reason of what

1:01:18Graham Stephan:you're saying is like is what has prevented me from putting a meaningful amount of my portfolio onto a strategy like selling covered calls because every smart person says that the market is efficient and that there is no way to get a hundred so just buy the index and save yourself the hassle it's still to me the logic does not make sense like i would love to be presented with an argument aside from just some theory that the market is efficient and you can't get it with actual math and data suggesting but there is look at the spiva research all these if you could be an active manager that is just trouncing the S &P 500, go look at the SPIVA research.

1:01:53If you go to SPIVA, was it SPIVA.org or whatever is, but it shows you managers will beat the S &P, but not consistently.

1:02:01Graham Stephan:I think that they probably have, they're probably trading huge amounts of money, which is there. That's the other problem. That's a whole nother problem. I think that we, let's, let's discuss this afterwards at dinner because we're doing dinner afterwards and I would love, we'll, we'll say if they're right, if I'm right, or if we just agree to disagree. Jack's gonna cut back in like tears in his eyes yeah but I do but I do I like but I think it's it's actually It's like— It's freeing if we tell the general public that it's okay to buy an index fund. Oh, 100%. Even if you have millions of dollars, it's okay to buy index funds.

1:02:32Because there's still some sexy, exotic stuff you can even do with index funds. Graham and I had off conversations. Really cool things that are out there down the road if you're trying to get creative with borrowing money and other things. But you can just start your foundation still on just buying the general economy. And I think a lot of people are surprised to hear that even folks like deca-millionaires who have tens of millions of dollars invested, a lot of them invest the money the exact same way as folks who have tens of thousands of dollars. Low-cost, well-diversified index funds. Should they be invested the same way?

1:03:04It depends on the unique circumstance, but I think in a lot of cases, yeah. I know for a lot of the folks that we work with, they're doing the exact same thing. Buying low-cost S &P 500, well-diversified, appropriate cash, appropriate risk metric.

1:03:16Graham Stephan:So here's an interesting theory. I think if you have less money, depending on age, obviously, let's just say a young person who has a lot of money, a young person who has little money, the person who has less money should probably be a little bit more aggressive because to them, you can't really do anything with$10 ,000. So what's your definition? Like if you don't think the S &P is aggressive, you think only the Qs? What are you thinking? Yeah, you know, you could be more tech heavy. You could maybe have a couple stocks that if they end up doing a little more risk capital. You've heard us say like NVIDIA, HUD.

1:03:47But what you argue that if you have a recency bias to that, to that analysis, if someone has

1:03:52Graham Stephan:$20 million and you'd say, oh, well, you should have tax free muni bonds. You should have, you know, a little bit of this, a little bit of international index funds, stuff that's more oriented towards capital preservation, because once you have$10 million, you've won the game. There's nothing in your life that like for a reason for a normal person that you want that you can't afford. But if you have$10 ,000, you can't raise a family. You can't afford a new car. if you need one. Let's say your car breaks. You might have a hard time transporting yourself around the city. You still need to work in order to afford the things that you want.

1:04:23Graham Stephan:Someone with$10 million does not. So it's reasonable that they would go into capital preservation as opposed to the other person going into more like a growth. But the S &P is not capital preservation. I mean, look, it's not wild out, but it's also not capital preservation. I would ask the risk of not being a successful investor is greater for folks with smaller sums of capital or lower incomes. That's why the person who has a smaller income, but a lot of time, and they're only able to save, you know, I can only save a thousand bucks a year or$5 ,000 a year. It matters for that person that that 5 ,000 grows and does well because they are really, really counting on it for that to be multiplied through compound interest over years and years and years and years.

1:05:07If they say, oh, you know what? I need to swing for the fences, I'm going to put all of it in NVIDIA or, or an app or fill in the blank. And it doesn't pan out. I would argue that that was more. Got some behaviorally too, because I mean, look, I have a great friend came to America and he starts making good money. Started some businesses here in the United States, starts making good money. And he asked me how investing works. I was like, let's, let's dabble into the, let's get you in the S and P 500. You know, we set up, we open up like a fidelity account, set up a contribution. I kid you not. It was probably two months into it, he calls, he sends me a text or calls me.

1:05:42I can't remember. And he's like, you didn't tell me I could lose 12%. And I was like, no, this is part of the process. It's going to be a-okay. Don't worry about it. So I found out he shut it down. So he only did, he only did two months, but they were decent sums though, because he was going to dollar cost average, some pretty good chunks because he has good money and he had some good savings. So these were two decent tranches that he put into the market. Fast forward five years, we're still good friends. He comes to me and he goes, I think I need to fire this thing back up because I looked at this account and Brian, this thing's up like 60%.

1:06:16And I'm like, yeah, this is the way this whole works is that, yeah, you know, you, you put the money in, you just, but you can't look at it daily. And that's what I worry if you put something too aggressive for somebody brand new to the money-making process and how the economy works, they get discouraged. And for a new person who doesn't know how economies work, what feels risky in the short term is actually your best advocate and success vehicle for the long term. And what feels safe in the short term is actually detrimental to you in the long term. That's what all these people, I grew up in a household, we didn't have money, but my parents were great savers, really good savers, really disciplined.

1:06:56I get my discipline for my parents, but they did CDs. CDs will gut you with inflation and everything else. If you don't understand the value of actually making your army of dollars work, you're doing the hardest part of the discipline, but never getting the part of letting your money do the work for you.

1:07:13Graham Stephan:So we've been pretty open about how much we love our team here at the Ice Coffee Hour. And when we were looking to hire Gavin, he wasn't just qualified. He was eager to learn about the job, excited about the podcast, and you could just tell that he wanted to be here. And that's what really made him stand out. And honestly, that is everything when you're hiring. You want a candidate who's passionate about your role, but you can't get that insight from a resume alone unless you post your job on our sponsor, ZipRecruiter, because right now you could try it for free at ZipRecruiter.com slash ICH. And ZipRecruiter has this incredible new feature that shows you the most interested and qualified candidates first, so you meet the right people way faster.

1:07:48Graham Stephan:And candidates could tell you in their own words why they're interested in your job. So you're not just guessing on who's actually wanting to be there. Seriously, guys, it is absolutely no wonder why ZipRecruiter is the number one rated hiring site on G2. Find candidates who really want your job on ZipRecruiter. Four out of five employers who post in ZipRecruiter get a quality candidate within the first day. You could try it for free at ZipRecruiter.com slash ICH. Once again, that is ZipRecruiter.com slash ICH. Meet your match on ZipRecruiter. Real quick, do you remember that doctor's appointment you were supposed to make a while ago?

1:08:21Graham Stephan:The one that's been sitting on your to-do list for weeks, maybe months. Look, maybe it's just an overdue annual checkup, or it's the weird rash you keep Googling, or your dentist reminding you it's been two years since your last cleaning. Trust me, we've all been there. Booking a doctor's appointment has always felt like such a hassle until now. That is where our sponsor ZocDoc comes in. For those unaware, ZocDoc is a free app and website that allows you to search and compare high-quality in-network doctors, and then you can instantly click to book an appointment. You can filter by insurance, location, and medical specialty, and you can also check verified patient reviews so you know exactly what to expect.

1:08:55Graham Stephan:And then once you find the right doctor, you can see their real-time availability and then book a day in a time that works best for your schedule. And appointments made through ZocDoc happen really quick, usually within just 24 to 72 hours of booking, and sometimes, yes, you can even score same-day appointments. So finally, stop putting off those doctor's appointments and go to ZocDoc.com slash iced to find and instantly book a top-rated doctor today. That is Z-O-C-D-O-C.com slash iced. This message is sponsored by ZocDoc. Thank you for sponsoring the episode. What are some of the biggest mistakes that you've seen people make?

1:09:29Well, not saving, I think, is one of the most common you see across the general public. Just never actually getting started saving or putting something aside, living at their means. Because everything we're talking about is precipitated upon the idea that I'm going to defer a little bit of my income, my pay, my whatever today for some greater outcome in the future. And a lot of people don't even make it that far.

1:09:50Graham Stephan:I want to see the horror stories. Well, the other thing, you see them, I mean, and the stats show it too. I can't remember if it was Schwab, Vanguard, one of the big investment houses talked about how much 401k money is just sitting in cash. Do you know how disgusting that is to think about how much money in an asset you can't even reach until you're in your 50s to 60s is just sitting in cash. That breaks my heart. I think that's a huge mistake. We see that all the time because a lot of people also don't know when you do rollover transactions, you know, it's a two-part transaction. You transfer from your old job to your new job, but then the second transaction, you actually have to invest the money.

1:10:26A lot of people go through the hard work of transferring, but then it just sits in the cash reserves or the stable value and never gets invested. That's disgusting too. You know, not saving, not letting your money work. I'm trying to think of the other thing. I've got two horror stories for you. One, not knowing when you've won the game from a risk standpoint. Tell the story. You know who I'm talking about. I won't give too many details. We had somebody that was in our life and I saw their network, because they left some stuff on the copier machine one time. And so that's what you do

1:10:59Graham Stephan:when you see someone leaving papers there? No, you're just trying to clear it up. You're like, holy cow. It was a very successful, this gentleman had a small business. He was a developer. successful. Well, he started off as it was, it was more of a food industry job. He had enough. His son comes along and convinces him, Hey, use some of that financial success. Let's get into real estate development. And they got into doing real estate development and now realize pops is set for life. I mean, and by the way, pops has done some good things. He owns commercial real estate. He's, you know, he's, he's got all these things going on.

1:11:32Well, they start getting into, you know, residential developments and they took on more and more debt. And unfortunately they put up like i knew the commercial building that we had some affiliation with them it was debt free it was completely but a building can be debt free but if it's promised to the bank as collateral as collateral on some other deals that you do and that's why personal when i used to work with professional athletes the personal guarantee was the thing that gutted most of these guys is because they don't realize what they're signing on to when they sign those personal guarantees is that and we watched this port this multi-generational family that had every millions gone to nothing.

1:12:10And essentially, you know. Ended up losing the buildings, losing all the assets. Lost it all. And they just did not recognize, hey, we've won the game. We don't need to take on additional risk. And then we have another. Don't run up the score. Another, this is a horror story. One of our recent guests on Making Millionaires, you know, we sit down and kind of do this, have this conversation with them. They had a financial advisor who had this unbelievable deal that they ought to get into. And you just give us some money. And what ended up happening is the advisor said, hey, we're investing all this money in this development in Texas.

1:12:39They did not live in Texas. And it turns out the advisor just fleecing them, just taking the money, never actually invested it, ended up losing his license. And it was just this horrible thing where they lost hundreds of thousands of dollars from a nefarious actor because they believed him and trusted him and didn't actually know where their money was. I mean, we've had cases, I mean, because we've been doing this decades now. I mean, I had somebody who convinced a widow with their 401k money to buy a bunch of equity index annuities that was, you know, fortunately, because those things have look back periods, we were able to go in and unwind it and fix it, you know, and kind of like the Nick of Tom can imagine, um, you know, we, we've done some things to help people.

1:13:22Another retired couple paid off house, uh, prior financial advisor was trying to convince them to do a cash out refi to take all that money in the accounts with him and go invest it. And also buy a bunch like insurance annuity products out of the equity in their paid off house. They were already retired with pensions. It was. Yeah. From a risk standpoint, that's, that was less than fiduciary for sure. Did not make, did not make a lot of sense.

1:13:44Graham Stephan:So managing$2.2 billion, who are the best investors aside from pilots and who are the worst investors? You know, I think anyone, uh, engineers tend to be like very good. If you work in like a pragmatic field like that, engineers tend to be really good, accountants, people that are in finance generally understand how money works. But it's really interesting. I do think, and Brian said this earlier, I think there might be like a savings gene that we're born with. People that just understand this. Because you would be amazed at all the like different and wild vocations where people can be very, very successful, even if they're not the attorney, doctor, engineer, you know, that sort of thing.

1:14:26So on the stereotypical high income careers, the one, now look, I have clients that are in this field. So I don't want you guys write me and say, I'm in that field. Why would you say I'm good with money? Yes, y 'all are good with money. You work with us. You're a client. But I am amazed at how few attorneys we have as clients. Now we do have attorneys as clients, so don't mishears. But I don't, I'm one, if you look at engineers, accountants, teachers, attorneys, doctors, because we have a lot of doctors too. And we pick on doctors. Doctors already get picked on a lot. But there's a lot. What I think is interesting with medical professionals, there's a wide disparity.

1:15:02They also have a target on their back. There are some that are like unbelievably astute and incredibly good at managing money. And there are some that are unbelievably egregious and make horrible decisions. That's a wide gap. I don't. I just I'm trying to figure out if attorneys personalities just don't lead to a lot of. I mean, because obviously there's a lot of wealthy attorneys. Don't get me wrong. But seeing them in practice, working with financial advisors, I don't see as many. We do have some doctors. Now, we work with a lot of doctors, too, but I think that they have the uncomfortable thing is that they go from tremendous debt to making great incomes.

1:15:35So there's entire cottage industries trying to sell them products to kind of lock their money up in a lot of ways, too. And I think a lot of people that have the most success are people that are able to, I'm going to say build wealth slowly, but like build it consistently. Some of the things where it doesn't always turn out great, professional athletes who like sign a big deal, big contract, but it's relatively short-lived. People that inherit a lot of money from a first or second generation. Big windfalls. Hey, I sold a family piece of business or I sold a business that was not liquid, but then it became liquid.

1:16:08Windfalls are also an area where it's kind of touch and go in terms of how well they're going to steward that. Good ones. Blue collar businesses. Oh, yeah. Usually they crush it. Small business owners. Small business owners, they crush it, especially when you can get in there. That's the ones that I get the most, like, want to high five after I walk out of a meeting on. Because when you see their tax structures and you see their account structures and you show them the tax savings on certain strategies that you can do. Because if you're a small business owner, because you know what happens with small business owners.

1:16:36They go from they're paying taxes, but then one year they actually hit it where their income bounces. and then they realize, and they go meet with the CPA and the CPA is like, by the way, this year you owe$75 ,000 plus you own an underpayment penalty of like six or$7 ,000. And that's just in the first year they didn't know what? I paid all this tax already. And, you know, so you can imagine they already have a relationship with taxation that they don't love it. So if we can go in there and show them through just good retirement structures and other things, or even business structures that we can clean that up, they love you.

1:17:10You can imagine. It's like, like I said, high five moment.

1:17:13Graham Stephan:When it comes to investing, I'm curious because Vanguard now predicts lower than average returns over the next like decades. I saw your sub stack and I chuckled to myself. You have to know, Graham. I have to. I chuckled when I literally went slow because every year. And if you go, we could probably go pull the tape because we react to that every year. Vanguard. One of these years. Every year Vanguard tells us, you know what you ought to expect from the market going forward? But it seems. About 3.8 to 4%. They tell you that every year. It seems realistic. Every year. Does it not seem so much realistic?

1:17:44That's got to be the easiest job. I want that guy's job. I want that guy's job. It's always, back coming out of the Great Recession, we saw some really, really good years. 2009, 2010, all the way up to 2012. And in 2013, I think the market made like 32%. And they said it again. All right, market is recovered, poised for below average returns. And they say it over and over and over again. And at that point in time, you would have suggested, man, well, doesn't it look like this? Look at all this stuff going on. Look at what's going. It always, quote unquote, looks like that. And yet it doesn't manifest.

1:18:15Now, could there be a period of underperformance? Perhaps. Yeah, that could be a thing. But is there something going on right now distinctly that would suggest the next period is going to be underperformance? I don't think so. They literally said 10 years ago that over the next 10 years, you're going to average 4%, 5%. If you look at what the broad markets have done, it smoked it over the last - 17 to 20 % in the last six years. Every year, there's typically a 14 to 15 percent entry year up and down anyway. And if you think about what we've seen historically, like broad markets like the S &P that we've already had all these conversations, they typically do what's called a V-shaped recovery.

1:18:52They will either get overpriced really quick or underpriced really quick. And you see snaps, you know, it pops like we call the rubber band effect, you know. So that's why if you just dollar cost average, I know it's boring. I know it's not sexy. But if you just consistently buy, you get to capture all that stuff. It's a great volatility protector from yourselves is just being consistent with your behavior. The difference is like real estate, because I know you have so much background in real estate. It's more of a, you know, a U-shaped recovery. You know, it's not uncommon that you'll see the real estate market not do fee-shaped recoveries.

1:19:25They're more much slower moving. And I think that's why sometimes we have trouble, or at least the public does, differentiating that different things act completely different. And that's why when Vanguard tells me 3.8 or 4.8%, I'm always like, a moment in time. I mean, last April, were we down 20 %? I mean, it was—so if you were basing decisions off of that, I think you would drive yourself crazy. But I also think it's like the weatherman, right? If the weatherman predicts a beautiful sunny day and it rains, you get pretty upset. But the weatherman predicts a rainy day and all of a sudden it's shiny, everybody's in a good mood.

1:19:59I think that's what man goes to. That's what I've often thought. They've had their thumb on the scale as they, we're going to get you 4.8 % and then voila, oh, another year we got 8 % or 12 % this year. It's best to set expectations. That's right. Under promise, overperform.

1:20:12Graham Stephan:Well, speaking of overperformance, what do you think about investing in Pokemon cards? There's a lot of people that do it. I watch a lot of content on that though, by the way. I don't do it myself, but I've watched all those seasons. I'm fascinated by the collective And what's wild is like, so my brother, he has, uh, my, him and my nephew have kind of gotten into it and they'll do the thing with the packs. And he's opened a couple of packs that had like some very valuable costs. And he's actually shown me how they have everything like cataloged by like what it is, how much it is, what the RO. And it's wild.

1:20:40Now it's a collectible like anything else. I, I would not call that investing. That would not be my nomenclature, but it is a collectible that does have the ability to increase in value over time. No different than other types of collectibles that can increase in value. I've always wondered. Now, look, I'm not, I do not, I'm putting the disclaimer out there. But it's just like, I'd be curious, and maybe somebody knows this, and they put it in the comment section. Like, Elvis, now, maybe because the new movie came out, it's back, the market's back up or whatever. But I've often wondered, because that audience is aging out, are his collectibles, like, still worth as much as they were?

1:21:12Because I often wonder his memorabilia. Like, because collectibles, I have to believe, is there some ebb and flow on the age of the people? Exactly. That's the inefficiency. that they're taking advantage of. Well, that's why they're saying right now

1:21:23Graham Stephan:the future collectible is going to be Justin Bieber and Taylor Swift. Oh, really? Huh. But I would imagine their memorabilia is already... It is. But imagine in 30 years from now when a lot of those people have a lot of money and maybe they're not performing as much. One thing is, like, Pokemon was a big thing when I was a kid, right? And it seems like there's been this new resurgence that now young kids these days, it's still a big thing. So I don't feel like if it were going to be a collectible, it's going to be a long time for it to be. But you realize you are getting to the age now where things are going, you're going to see the boomerang.

1:21:53It's just starting to go again. Because things from your childhood will now become the hot commodity just because of you are the age of, you're the parents, the generation of kids. Consumption is profitable. So there are people who are out there creating markets to take advantage. You'll see the movies, the music, everything is going to be catering to your group when they're creating all this creative content.

1:22:16Graham Stephan:Let's rock it on. So what percentage of a portfolio should be allocated to Pokemon cards? I mean, look, if you want to, because we let people do speculative stuff. So if you want to, if you want to dabble with three to 5 % of your portfolio, go, go knock yourself out. That's more, but it falls in the back to the, to the Jack category of hobby. I mean, cause that's what I'm not picking on you about that, but you said you get fun out of that. I do get fun out of it. Yes. I say less than five, less than 5 % of your liquid portfolio would be okay to do something. If collectibles are your thing or individual stocks are your thing or, you know, cover call option strategies are your thing, I would try to limit it there.

1:22:49Graham Stephan:Here's what I found really interesting is that there's a theory out there that says that young people are not buying houses because houses are so expensive. So instead, they're putting their money in collectibles like Pokemon cards, watches and cars. And that's why a lot of those things are going up in value, because think about it. Maybe buying a$600 ,000 house is unattainable. Buying a$20 ,000 Pokemon card, you can't theoretically obtain that. or buying a$80 ,000 sports car. But the thing, can I tell you the only problem I have with collectibles is kind of like, because I went through a watch phase myself.

1:23:21Now I'm all, it seems like the wealthier I get, the more gizmo I get. Instead of looking at the luxury watches. The thing nobody ever talks about is the market drag cost to actually turn what the market value is into liquid value. Because you usually have to go through brokers. You typically have to, or a trading site that's going to have some type of trading cost to it. so the market what and we all get frothy and excited about it but if you actually i think it took into account all the cost that you'd have to turn that into liquid cash i don't think it's actually as valuable or as people say i think it's great if you sell that like i think mr golden probably does a great living being the marketplace for that stuff because it's a pretty nice rake on that but i mean but if you were thinking this is how i'm going to build my wealth it's the same if you're trying to sell watches or jewelry, the market is very inefficient on what the costs are going to be for you to turn that into liquid cash.

1:24:15Yeah, and they're all unique products. So you'd want to feel pretty confident you had the right one, right? Not all Pokemon cards are designed the same. So you hope that you buy it for$20 ,000 today and it's worth more in the future, but it's only worth more in the future if someone else is willing to pay more than you paid for it. I would tell that young person, hey, if you have$20 ,000, instead of doing the Pokemon card, if you're going to set yourself up for a higher probability of success, go buy$20 ,000 of the S &P 500. And you have a higher probability that in the future, that S &P 500 would be worth more than it was when you purchased it.

1:24:45But I do want to give one exception is that, because I've had two examples. We had a client of the firm who was making six figures trading Disney pins because he was just an expert at the market. And since it's such an inefficient marketplace, he'd go find pins, you know, whether it's eBay or elsewhere, and people not know what they're worth. and you go basically steal them. It's kind of like your story. But that's an active endeavor. That's an active endeavor. It's not stealing, by the way. He knew the knowledge. Well, also, because you always hear people say, don't buy boats. The best two days on a boat is the day you buy and the day you sell it.

1:25:16But then we had a client that also made a great living buying, trading boats. But once again, it's because he was an expert. It's back to my point earlier, bringing it full circle. Sometimes it takes 10, 15 years to develop the expert where you can see stuff that nobody else can, but you have to take into account There's a skill set or a time component that also went into that, that, that efficient, that you've built a skill that the market doesn't have. And that's why it's easier just to buy the index if you can't go out there and spot that. And if you don't know if you're the expert or not, then you're probably not.

1:25:48Graham Stephan:You're probably not the expert. What are the riskiest investments that you both have personally? Well, I would argue like commercial buildings. Does that, does that count as risky? Is that, that's not a risky thing? What are you talking about? Triple net commercial real estate. No, it's, you know what I mean? I would argue that that, you know, that kind of stuff. You know, we're small business owners, right? There's a lot of volatility in small business. So that would be an investment. I know what y 'all are getting at. Where have you put your money? I dabbled in crypto. I dabbled in crypto for a while.

1:26:19I did it for about a three-year stint, and I lost money on it. So I quit because I just, I was trying to dollar-cost average into it to see if that would work. And it was just the thing that bothered me about Bitcoin.

1:26:31Graham Stephan:Yeah, but you did the exact same problem like the other guy you were telling about. And then four years later, like, oh, man, I should have. Let me defend my position. And I will admit, if I'd have stayed the course, I'd have done okay. But what I didn't like about it, Graham, was the daily volatility. It didn't feel like an investment. It felt like a speculative play based upon how much play was every day. um and i mean when you have four six eight percent you know every day on your trading that's that's weird to me i mean it just it feels like the market swings and we still like right now i i'm barely keeping up with bitcoin anymore because when i gave off and the other thing that scared me off from it was when the government put that line across the top of your 1040 and bade you basically yes no are you dabbling with cryptocurrencies i felt like they were setting a trap to a degree because a lot of people are out there marketing, hey, this is outside of the government.

1:27:24You don't have to do it. And I'm like, no, taxation is not outside the government. And if you're not checking that box, yes, you don't, you don't think Coinbase, or even if you're putting this stuff in vaults and stuff, there's things, I don't know if you're keeping up with some of the geopolitical stuff. They just had a big announcement that a lot of the Iranian Bitcoin and stuff has been frozen. How do they know about it? You know, when we had all the protests up in Canada, they froze all the Bitcoin of those turkeys. How do they, that's what you're told these things about, and I just don't think it's as disconnected as everybody thinks it is.

1:27:54And I worry the volatility makes it feel more like a speculative play than an investment. And I'm more into the investment. Emotionally, maybe it's because I come from an accounting background. I don't get my highs from riding the speculation.

1:28:07Graham Stephan:What price did you sell Bitcoin for? I mean, it was probably in the mid-30s. It was in the mid-30s. It's around$35 ,000 probably. So you would have doubled. Yeah, I would have doubled from here. I would have. But, you know, I have no regret. I would have done okay. You would have doubled. I mean, but realistically, I could have tripled. But now I'd have been back to double only in like a, because we went up to 100. We went up to 100. How high did we go? 120? 125. Yeah, 125. So, I mean, but look how crazy that ride is. I mean, I would be, because the other thing is, I already told you the Apple story.

1:28:40I mean, I still kick myself on that one. Because emotionally, I started getting reactions. Now, look, as a percentage of my assets, it wasn't even a rounding error of a tenth of a percent. But yet I was mad that it was down. And it's the Apple. I mean, I should have held on, but you don't know. And that's why probably the craziest thing I have now is I do have close to seven figures in one stock. And I've just told myself I'm going to ride or die with it.

1:29:05Graham Stephan:What stock is it? Should I say? Yeah. Should I say what it is? Is it okay to say? I think you can say because you've owned it for a long time. okay in 2018 um i got my first tesla i got the model 3 i got the model 3 i got the model 3 in 2018 and i had one of the early versions it was because i remember i'd ride by the coffee and cars like where all the exotics were here in town because there's a lot of fancy cars here and i watched all these these people with their lamborgines right because the model 3 when it first came on scene people were like really excited now we see them everywhere i mean you can go i can walk outdoor and probably we can throw a rocket 12 of them but but when they came on the scene and this is the first time i drove a car that people were like ripping their necks trying to look at you and everywhere you pulled up you know people would want to talk to you about it so i was like holy cow this thing is pretty magical so i put 25 000 into into tesla back at the beginning of 2018 you can imagine it's done pretty well so you're at close to seven figures now.

1:30:02Yeah.

1:30:03Graham Stephan:Now, if you sold some covered calls on it, it sounds like you're a little overweight in that stock. Can I tell you the other thing I am excited about? It's in a Roth IRA too. Is it actually way? It's in a Roth IRA. So I feel like I have totally - That's the best investment you've ever done. It's pretty good. No, the best investment is hiring Bo. There we go. I hired Bo in 2008. That was probably the best. But yes, from an individual stock, it's been the best investment. Incredible. And I've just decided I'm going to ride or die with it at this point. There's no plan. There's no goal. It's not if it hits this amount, you're going to do something.

1:30:35Graham Stephan:It's just like money for the sake of money. Because even though that is at that level, it still is a percentage of my holdings is just, it's not enough to move the needle. And so for you, you don't have a story like that. Well, I have one similar, but it's way, it's not as exciting. I also own Tesla stock. Mine's not quite seven figures, but I was going to do, mine was a content play when they first, when they very, very first announced the Cybertruck. I knew how much Brian loved his Tesla. I'd ridden it at lunch and I was like, oh, you know what I'm gonna do? I'm gonna see if I can create some content.

1:31:04So when they announced that I started just dollar cost averaging, buying a couple thousand dollars of Tesla every single month. Right. And my plan was by the time the Cybertruck actually came out, I was going to create some content around, this is how Tesla paid for half my Cybertruck or whatever the, whatever the thing was. Well, it ended up coming out and it was not as like interesting or exciting to me. So I decided not. We decided we're not cyber truck type people. I was like, I'm not really, but I was like, well, okay, I've got all the stock and it, and it did what I thought it would do. It was certainly more than enough to buy the, buy the truck.

1:31:34I was like, but you know, I'm going to hold onto it for, for some of the same reasons Brian said, I'm like, I've got it. I don't really want to pay the taxes. I don't want to trigger the gains. So I'm just going to kind of consider that a lifetime holding. So that's, I guess, technically that's my riskiest investment. My wife forbid me from buying the cyber truck. She thought it was so ugly. I couldn't do it.

1:31:50Graham Stephan:And what's the most that both of you have lost on an investment? Because it was a speculative play. I mean, that Tesla has been all over the place. But I haven't lost. I didn't lose. Yeah, you've made a ton of money off of it. What have you lost money on? You know, we did options for a while. This was not a ton of money, but it was a great learning experience. You know, we did some option strategies way early. Back when I got the CFA, very early on. We were like, let's flex the muscle on this investment. In the early 2010s, I thought I had the market figured out. So I came up with some option strategies we could deploy.

1:32:21I was the strategist. Brian was the capital back then. And so we made, we. We doubled in like a month and a half. We thought we were genius. The worst thing that happened with strategy is you actually hit it the first time. So we turned 5 ,000 into 10 ,000 like in a month. And we were like, we are genius. Like, Bo, we're going to be so rich. And so then I was like, hey, you know what? Okay, this was good. I have another idea. And I came up with another idea. And this is what's so frustrating. We were going to buy some long calls, and then we're going to buy some puts on - Well, we can say, because it's kind of fun to think about as Netflix.

1:32:55Yeah, we were going to - Oh, wow. So we bought calls on Apple, because we were bullish Apple, and we bought puts on Netflix, because we thought Netflix was overvalued. And it was. We were right. And here's what's wild. But this is why you have to be worried about the time degradation. It's a real thing. That's why you sell them. It was like six, nine months, something like that. And I think Netflix was trading at like 300 or something at that point in time. And the time ended up running out. Options ended up expiring worthless because, you know, it never... And I kid you not, it was like less than six months later.

1:33:24I think it was less than two months. Two months later, it won't drop down by like 70 or... Stock lost like 30 or 40%. $70 or$80 a share. It was a huge drop. We would have made a fortune. If we would have been two months earlier. But we realized that you can be right on a trade and still not make a dime because the time element of doing contracts, it can hurt you because you can be spot on, but markets aren't efficient in the short term. They're very inefficient on the short term. You can be spot on that something is overvalued. It's a bubble or whatever the case may be. Now, look, Netflix turned out to be a great company in the long term.

1:33:55That's once more one more, you know, cap, you know, feather in the cap for being a long term investor is that even if you would have ridden that stock down the 40 percent where we were right on the overvaluation, they caught their stride and went right back up because they were still, you know, there's been frothiness. All companies deal with that. And that's why I like being a long term holder. But that's why the lesson I took away from that is as an investor now, since that point until now, I have a really hard time betting when there's a time constraint. If I'm going to buy something or invest in something, I want to be okay.

1:34:26This is a Warren Buffett mantra again, being a lifetime holder of that thing. If I buy this, I don't care what it does, this week, this month, this quarter, this year, this decade, I'm going to be okay holding it long term. That's why most all bets, even if I was going to do some sort of option thing, I want to be long. I want to be bullish on whatever that is because it's just so hard to get the timing right when it comes to investing. The market has a way, at least in my experience, of making us all, even the smart ones, look like fools.

1:34:52Graham Stephan:What are your thoughts right now on the real estate market? Because here's a few other stats. 75 % of U.S. homes currently for sale are unaffordable with the median income household. And 97 % of the U.S. are considered unaffordable by historical standards. It's hard out there. We just did a show that's doing really well because I think we hit a chord with something. Should you own a rent? And we went deep into the data. And because something I've been on the rooftop screaming, I've kind of. Because it's frustrating. Yeah. I mean, because I want people to be able to buy a house. But I also want people to get good information so they don't get themselves in a bad.

1:35:29Somebody give them the expectation that they should buy a house because that's the next thing successful people do and get themselves in a bad situation. And what I've been telling people, and I'd encourage you, please go check out that show we did because it was a super deep dive. I'm not going to be able to do it justice with this quick answer, is that for a lot of people, you know, the market made 50 % in like a three-year cycle on residential construction. You know, if you think about what houses went up. So to think that that reversion to the mean, because like I said, it's not a V-shaped recovery with real estate markets.

1:36:00They typically are much slower moving. I think you're going to see real estate likely might underperform for a period of time. I mean, you're even seeing like a lot of markets now have inventory levels exceeding four months, which is something that we didn't see that long ago. We're starting to feel like that it's a buyer's market more so, but it's not there yet because also the interest rates went up to a point where 50 % more, your monthly payments went up 50 % just off the interest rate alone. So don't feel forced to do it. Do it because it's actually something that makes sense for your personal life.

1:36:34So from an investment perspective, we would argue primary residence are not an investment. It's not an investment decision you're making. It's a lifestyle decision. You need to make that decision based on when it makes sense for you to buy a home. So if you're someone who's thinking about getting into real estate as an investment opportunity, well, then it comes back to the same tenants that real estate has always had. Location, location, location. What's attractive about that market? What type of property is it? What do you hope to get out of it? What are the, you're going to pay cash? What are the financing options?

1:37:01Can you cash flow if it goes bad? I think you can still investigate it and look at it. And I think there still can be a compelling case to be a real estate investor. It's certainly harder to do now, specifically in the residential side than it was 10 or 15 years ago. And elongate your holding period. So you can hopefully the time will smooth out any craziness in the pricing.

1:37:20Graham Stephan:Yeah, it's crazy what I'm seeing right now throughout Los Angeles. A lot of properties are selling now for the same price that they were between 2014 and 2018. That's wild. Depending on the market. You've also highlighted there's a lot of crazy stuff on restrictions on how you can use the property too, which I think that kills the market as well. It does. But even in Las Vegas, I'm seeing a lot of sales that when people bought from 2021 to 2023, they're selling at the same level, if not slightly less. So these are people who bought and they're losing money on a sale, holding it for three to five years.

1:37:49So don't feel forced to do it because trees don't necessarily have to grow to heaven. That's the thing. I think we all know real estate's good, especially the levered debt side of it. When things are good, it's great, but it also can hurt you. If you have to use other people's money to afford whatever you're trying to do in real estate, you probably can't afford real estate. That's why we love real estate. You know, we've talked about it. We've done some decent amount of commercial real estate, but it's more of once you have a good financial stability underneath you so that if your place sits empty or, you know, you have to make big repairs or put a new roof.

1:38:23if it doesn't need to stress the system. Too many people try to get in way too soon.

1:38:28Graham Stephan:Is now a good time to flip a coin for a house? Oh, my God. I still, it still seems that he did it. Yes. He did it. He was like, hey, and it was$1.9 million, right? Like, that was how much my house was? Yeah. Y 'all said y 'all are friends with him? Yes. I wouldn't flip a coin. He's got to come see us because I want to meet his person because his personality is the polar opposite of my, I'm just, I'm too risk adverse to ever do anything. He would probably do it. He did a whole financial audit with Caleb Hammer. What's the most amount of money that you would flip a coin for? Would you flip a coin for a thousand bucks?

1:39:00Graham Stephan:Yeah. 10 ,000. With you guys? Yeah. 100 ,000. How many views do you think we could get if we did a flip coin flip for$10 ,000? Do you flip a coin, kids? No, not 100 ,000. I would do 10 ,000 because I know it would be going to you and you would invest it. Okay. Fair enough. So I just thought that someone could do that for$2 million. It just seems fine. Y 'all are great. in the, y 'all much better at the content space than us. Do you think sometimes when you do those big transactions that do you, do the views cover the cost, the loss? No. He spent, do you want me to call him? I'll call and ask him what's the most you would flip for.

1:39:37Graham Stephan:Oh no, we're not doing that. He just flipped for a house. And I'll also ask him, I am, I am better than I deserve on things and I'm just not crazy enough to do it. Okay. We'll see if he answers. Yo, yo, yo, we're on a podcast right now with the money guys and you came up and we had some questions okay did you really flip a coin for a house they don't believe that you flipped a coin for a house so we need confirmation you flipped a coin for a house and lost 1.9 million 1.95 million on one coin flip and i don't own that house anymore so okay so my friend the guy lost it to give me a but then I crashed it.

1:40:18Graham Stephan:So I didn't get much of it. Okay, so if you would have won, you would have gotten cash or what would you have gotten? Cash. So he put up cash for my house. So I would have gotten 1.9. So would it have really gone down? Like if you flipped and you would have won, do you think he would have given you$2 million? Gosh, that's just crazy. That's a different life. He's my best friend. Would you trust your friend that's sitting next to you to pay you$2 million? Yeah, but if you're my best friend and we flipped a coin for the house and I felt like I was going to take your house, I'd probably be like, dude, I know.

1:40:49Don't worry about it. Well, you know, two out of three or something. Did the video at least make enough to like compensate to make that a worthwhile investment of$1.95 million?

1:40:59Graham Stephan:No, no, you have to understand this. Listen, ready? It's not like I invested$1.9 million. I invested in the opportunity to make$2 million. The video didn't, this is facts, first of all. Facts. It's not about the video ROI. Maybe the video ROI made realistic$300 ,000. Okay, it did make$300 ,000. Opportunity. So really, I made$300 ,000 on the video, and a 50 % chance of making$4 million is worth$2 million. So I made$2.3. Just on paper, it don't look like that. That mathematics only works if you do it over and over and over again. For a single outcome, you can't do that same sort of statistical math.

1:41:37You wanted to do it again? You have to flip. If you were to flip 100 times, and 100 times you were to do that, in theory that your math would hold. But one time...

1:41:47Graham Stephan:I'd be a bunch of nerds about it.

1:41:52Graham Stephan:All right. Last question. What's the most you would flip a coin for? Honestly, as much as I joke about it, that was mildly traumatized. Okay. There we go. There we go. All right. Today, in my life position today, I would do$400 ,000. I'm not comfortable doing it anymore. Hey, can I ask a question, though? and you don't have to disclose this. What is your liquid assets, like investments? I'm just trying to figure out how deep 1.9 was into your bench. My assets? This is funny. You're going to like this. Hold on. I just want to know. I need to have context. My assets right now, we have like, you know, maybe we have a crib that's a few million, a bunch of dollars.

1:42:33Graham Stephan:But I emptied the bank account. No investment. This is my only asset right now. This fucking parlay that just hit for$1.4 million. I got to go cash it in in two days. Holy crap. What do you bet on? We put$600 ,000 on PSG to win two nights ago. So that's why I'm in Paris. We would have watched the game. Name five players on PSG. Couldn't name one.

1:43:00Oh, my gosh. That tells me everything I need to do. Wild, man. Congratulations. That is so awesome. Thanks for answering the questions. Good to meet you, Togi. Appreciate it, man. That's wild. There you go. That's wild. Man.

1:43:13Graham Stephan:He's as real as they come. That's brutally honest, too. Yeah. He's a guy you could trust with your life. He's a man by the way. But what if someone else is like, hey, I'll flip you for Bo's life? You'd probably take that. You know what I mean? That was all. I mean, holy cow. I mean, but you know what? In friend groups, I would probably want to hang out with somebody like that. Because I'm always looking for opposites. Because I'm wired so the opposite of that that it'd be interesting. I always love going to the casino when my buddies go in the high stakes room. I just get to kind of watch them.

1:43:43That's I get utility from that.

1:43:45Graham Stephan:Oh, it's exhilarating. We went with Steve will do it into one of the back rooms. And we saw there was a person there betting a hundred thousand dollars a chip. That's wild. And in a hand, you could lose a hundred grand, make a hundred grand. He was up a few hundred thousand dollars. But it was just to me, I got the same feeling as if I were doing it myself. Oh, yeah. But it wasn't your money, which is great. You got to do same experience. It's not the same cost. That's why I like to have friends that have boats. So in order to afford a property, how much money must you be making these days? For a primary residence?

1:44:19Oh, I think it depends, right? You know, it's interesting. You mentioned the affordability of housing. I think right now, if you look at the median home price in this country relative to the median income, it's like 4.8 times. It's the highest it's ever been. So housing is at as unaffordable of a rate relative to the median household it's been. So I think it's very much person dependent. In our opinion, when it comes to buying a house, we think that three things should hold true. You don't have to put down 20%. I think that a lot of people say you have to put down 20%. When you're first house, you don't have to put down 20%.

1:44:48You can put down as little as 3 % to 5%, depending on the type of loan you're getting. We do want you to be in the house at least for five to seven years, but we don't want your total housing costs to exceed more than 25 % of your gross income. So I think that's where the barrier lies. Like what income do you need to be able to buy a home? It depends on the prices of homes in your area that you're looking at. And you need the income that would substantiate. The housing is not more than 25 % of your rent. There are two asterisks I'd put with that. If you live in a high cost of living area that has public transportation, you might be able to boost that, you know, juice that number up 8 % because you don't have a car loan.

1:45:23You know, most people have car loans. The other thing is if you're in a high-flying career, like let's just say you're right out of school or you're an attorney or an accountant or somebody who's your career trajectory over the next three years is going to go up, you can use some projections to go, probably, you know, to skew a little higher. And I don't think you have to own a home. I think there's this conventional idea that you have to be a homeowner, have to be, you can be incredibly wealthy, incredibly successful and build towards financial independence as a renter. It's a very personalized decision based on where you live.

1:45:55Look at the, look at the market because like some markets you're crazy if you buy. I mean, we have a number of clients. Silicon Valley, it's cheaper to rent way cheaper than it is to buy. And then you just go retire somewhere. So why are people buying there? I think some people use it as a holder of value. You know what I mean? You know, if you have just told you the majority of Americans, only wealth they build is in their house. And so it's like a force. And also you have outside resources, you know, you know, the international money, there's, you know, corporate money. There's others that are using real estate as a holder of value.

1:46:27And you're in competition with that. And if you're, If, you know, you get married, you have kids, you want to start a family, you want to set roots, your family is there and you think, oh, well, I want to be a homeowner, but I'm not going to leave this area because everyone's here. There's a lot of things that pull people towards that. But if you're going to make that decision, you need to recognize that it can be hugely detrimental to your long-term wellbeing if it's a poor financial decision. And I don't know if I, if I might've misunderstood your question is because I think rent is so cheap in those places because a lot of those people have mortgage.

1:46:56I mean, if they have mortgages on the property, it's sub 4%. Because then they also, the prices were probably a third to a quarter. Because it wasn't that long ago that these property was much more affordable. That's very true. So renting is easier. Do you still think real estate's a good way to build wealth? Yeah. I mean, it'd be crazy. Like your primary residence? Yeah, I would say so. Over the long term. That's where you're holding, period. I know we said our checklist is five to seven years. Me personally right now, just giving an opinion. I love the rule. Five to seven is traditionally right.

1:47:28But I think you have to elongate your holding period because there could be some crazy volatility with just buying. How long?

1:47:34Graham Stephan:Because the average person, I think, holds their house for 11.8 years. 12 years, yeah. I think that would probably work. I think it's at least 10 years. But why does it build value? Well, most people buy a home. It's a lever property, right? So you're borrowing money. You have small amount down. But the entire value of the property, on average, is going to increase at about the rate of inflation. So if you assume the rate of inflation is somewhere between three to 4%, my home value is going to increase every year at three to 4%. And because I've levered, I am now amplifying the actual rate of return.

1:48:03So if my house for me, cash on cash return can make, you know, eight, 10, 12 % over a long time period, then yeah, it's going to build wealth, but you can't eat your house. So I wouldn't bank on that being the way that you're going to pay for your retirement living, but it's not, it shouldn't, it shouldn't surprise people that wealth can still

1:48:21Graham Stephan:What about this argument that you're going to have a lot of boomers going into these nursing homes and having to sell their house and all of these homes flooding the market at a time when millennials cannot afford it? Well, you never bet against a system could change to a degree. Think about this. I've heard several proposals. What if all of a sudden, you know, capital gains right now are capped at$500 ,000 on being tax-free for married couples,$250 ,000 for individuals? They could index that for inflation. They could change it. They should. They would probably, you'd probably have a lot more houses hit the market.

1:48:54And you know, because it would be tax-free gains, potentially indexed, people might be willing to give a little bit. That can maybe make affordability even help out a little bit because more houses would, because it's a supply and demand thing too. That's what I'm going to say, supply and demand. If all these houses hit the market, it's going to naturally drive down prices as inventory increase, as prices come down. Well, now all of a sudden it's affordable for millennials or for Gen Z or whoever. And then even the SBA is now made where residential construction qualifies for some of these favorable deals that they offer where these lines of credit are dirt cheap.

1:49:25I mean, I don't think residential construction has always been considered eligible for some of those SBA loans. So there's, I know there was a huge headline that came out probably four months ago. I sent every one of my home building friends. I was like, Hey, you might want to go check this out. It's just like when we bought this building, the SBA was a big part of the driving factor of that is because, you know, sometimes, you know, they're trying. I don't think the government is overall a creator of economic growth, but I do think that they can help subsidize and, you know, spark things to a degree.

1:49:58You need to pay attention to what those incentives are.

1:49:59Graham Stephan:I'm going to show you this. What do you think about this as a strategy to pay your mortgage? I just last week bought$250 ,000 a stretch. And the reason I did it, one was just to sort of go through the experience, which I enjoy doing. But the second is I have monthly obligations. And I said, well, I have a 1.75 % 30-year mortgage, right? And if I can, instead of paying down that mortgage, put it into an instrument that pays me 11.5%, that's 10x my mortgage rate. I'm essentially making money by taking the money, putting it into stretch, getting 11.5 % and paying off my 1.75 % mortgage. And where is that yield coming from?

1:50:40Since, again, you're not selling Bitcoin.

1:50:41Graham Stephan:Yeah, the yield comes from us issuing shares typically into the market. So on the back end, what we're doing is MSTR, our common, right? High liquidity stock, the highest liquidity stock in the stock market period. We're issuing shares and we're using that proceed to basically pay off our dividend. And as long as we're issuing shares above net asset value, that's accretive to our common shareholders and it's good for Bitcoin and it's good for stretch. Haven't we seen this story play out, though, with others? Because we reacted to some content where people were going out there and buying massive houses and then doing, was it stable coins or other things or these strategies?

1:51:24And then they all kind of, they imploded upon themselves. I remember that. I saw it. I could probably go pull our reacts. It was Terra Luna.

1:51:32Graham Stephan:Because I remember seeing a TikTok where someone said, I'm going to borrow from here and then I'm going to make 20 % a year from over here. It's free money. Why isn't everyone doing that? You know, what's funny is how full circle, because we're not unique. We all are trying to figure out how we can make money easier than everybody else. But it's back to the, if the market really lets you do that, I just don't believe it's possible. But let's step away from the actual investment that he was suggesting, that one. If you're someone who has a two and a half, I mean, he said 1.75, but two and a half, three and a half, four and a half percent mortgage, it's a really difficult thing to justify paying that mortgage off early because that capital likely could be better utilized somewhere else.

1:52:10Even if you're just buying a boring old index fund that's going to make 9%, 10 % annualized, if I can make 9 % or 10 % over the long term and I'm only paying over here 3.5%, 4.5%, even 5.5%, his strategy still works. It's not 10x, but it's still a 2x rate of return or whatever that number may be. I don't know about the actual investment he's suggesting, but the idea that if I have low interest debt, I shouldn't be super aggressive and paying it off makes all the sense in the world. It's why in the financial order of operations, the very last step, step nine for us would be prepaying low interest debt.

1:52:46I leave that as long as possible so my money can work for me as hard as possible. I get nervous when somebody talks about how stable or safe something is, but then tells me it's going to make 11%. I mean, it just, it just, it doesn't pass the sniff test. I mean, I've been around long enough for the Bernie Madoffs conversation. I mean, one of my, I've been doing content since 2006. I remember one of my favorite shows, it never was really popular, but you were involved with this too, is we did the, I pulled Bernie Madoff's regulatory filings. There were so many red flags in there. If you just go read his ADV.

1:53:15What did you see? Well, it was just like... When you deposit your money, you deposit it to Bernie Madoff Securities. And then the statements you received were from Bernie Madoff Securities. And then the reporting that he gave was Bernie... There was no check and balance. There was no Fidelity, Vanguard, Charles Schwab. And there were certain disclosures you were signing off on. There wasn't any sort of mark-to-market reporting required. It was... The small accounting firm that he was, that was the accounting firm listed, it wasn't one of the big four at the time. I think it was still big four back then instead of big six, but it was another household name accounting firms that you typically see with public companies or big companies.

1:53:51It was just all kind of weird stuff that he was doing that just, the only reason people were doing it is because a little bit of greediness that, hey, this guy was making greater than 10 % every year and it felt like it was somewhat guaranteed. So why not get in there and get some of that? you turn a blind eye when something seems too good to be true and you experience it for a moment, you let your rationality and logic fly out the window. I can understand how the S &P 500 is average 10 % a year because there's risk and reward tied to it. When somebody touts something on its safety and then tells me the same return as the S &P 500 that has risk associated with it, it just makes my spidey senses go.

1:54:31Graham Stephan:So what do you think is the ideal risk-free return? Are you just looking at the treasury and we're talking like 3 % to 5%. We're talking 3 % to 5 % depending upon where we are with inflation in the treasuries. Really good proxy. Whatever you're making on your cash and a good high yield is a pretty good proxy for what the risk-free rate is. Because I would argue that's about as close to risk-free as you're going to get. Yeah. Now, in terms of retirement, how important is it that you own your house? You know, we have a lot of clients who for their entire working career, they owned a home, they retired and they said, hey, I want to go be in Florida.

1:55:04I want to go be in Arizona. And they sell their house and they decide, hey, I'm just going to rent in different markets. And that works totally fine. So I'd argue for them, the necessity of home ownership doesn't exist at all. They have a fairly small footprint. They're able to kind of bounce around. That's totally okay. People can do it and be successful. And other people love having a home base. Hey, I'm going to buy my house. I'm going to have it paid off. I'm going to live here. This is where I'm going to age into a ripe old age. There's not a right or wrong answer. Personal finance is so personal.

1:55:31It depends on the unique thing that you're trying to accomplish. I do like people to be debt-free in retirement, but it's not a necessity. The thing I always try to remind people, you know, we have this concept, we talk about the wealth multiplier. That's why I get heartbroken when I find out a 32-year-old is paying down their mortgage that's 4 % instead of funding their Roth IRA because they're debt crusading versus I don't get mad when I find out like a 58-year-old is paying down a 2.5 % mortgage is because - Assuming they have assets. Assuming they have assets is because they might be deciding that the arbitrage or the delta on what they're making is just not worth it.

1:56:07The squeeze of the fruit or the risk is not worth it when what they're trying to do overall. So I like de-risking because I kind of alluded to this earlier. When you retire, meaning you're living off the money you've now saved or a pension or whatever, it stresses you out when you see all this geopolitical or economic stuff. because a lot of us, I think we have this cope that we do is when the market goes down, we're like, it's okay. I'll just put down my nose. I'll work harder. Maybe I'll even save a little bit more to hedge against it. When you leave the workforce and you go into full retirement, you don't get that comfort.

1:56:41Now you have to say, holy cow, I'm not only living off these assets, but I'm watching the volatility decay, what took me decades to build. So it just hits different. So if you can do other things in your life, like take out debt and other things that create obligations or things that you have to do. It's a truer version of freedom in retirement.

1:57:02Graham Stephan:Is$1 million enough to retire in 2026? Can you live off of$40 ,000 a year? How old are you? 60 years old. Okay, 60 years old. What that means is Social Security is likely going to come your way. 60-year-old with a portfolio. If you assume somewhere between a 4 % to 5 % annual withdrawal rate, you're going to be able to pull$40 ,000 to$50 ,000 off of that, assuming you've never been into the principal. But reality in retirement, you can get into the principle. Did you say put Social Security on it too? So then I was going to say, once you have that$40 ,000,$50 ,000, then you put Social Security on top of that, which for a lot of folks is another$30 ,000,$40 ,000.

1:57:33So if you live off of$4 ,000 or$5 ,000 a month, yeah, maybe. What if you're 40 years old? No. Will a million be enough when you get there? To retire? I'm going to say no.

1:57:41Graham Stephan:You want to retire at 40? He's going to retire at 40. I'm going to say, he'll want to tell you why I say no. It's because there have, and I'm not going to call them out by names, but there have been other fire movement people who've retired super early, like 35, 40. and then they've come back and they're still, they're really good people and they've done great content. But they, but if you're being honest, once they started having kids and they realized, holy cow, these kids are a lot more expensive than I ever thought. And they usually have to go figure out because it's just, they didn't have enough life figured out to truly call yourself retired at 40 years of age, because a lot of life is still going to happen to you.

1:58:13I think a lot of times in retirement, you need to, the die needs to be set to a degree. So you kind of really can measure out what your expenses are going to be in the future. If you're doing this at 35 or 40 years old and you don't, like for you, Jack, you're not married, right? Don't have kids. Do you know how much life is going to change for you? If you tried to say right now, I'm done, I've got enough. I just don't know that you have enough of your life tied down.

1:58:36Graham Stephan:What is the realistic retirement amount for someone who wants to have a family of four? I want to make sure I understand your question. Are you asking, can a 40-year-old with a million dollars retire today? or can a 40-year-old today get to a million dollars by retirement? No, can a 40-year-old with a million dollars today retire? Yeah, I think that'd be hard. And so what is the realistic amount? Because health insurance too. What is the realistic amount that someone who is 40 years old needs to retire to support a family of four? It depends on their living expense. I know it's a really hard answer to give, but it depends on living expenses.

1:59:11Some families of four can live off of$3 ,000,$4 ,000 a month. Some families of four, it requires$9 ,000,$10 ,000 to live. Well, the retirement portfolio necessary to satisfy both of those enterprises, very, very different. So it's hard to like give like a hard and fast number. I wouldn't even sniff around it unless I had three to$5 million. At the age of 40? Yeah, 40. Yeah.

1:59:32Graham Stephan:What would you say FU money is? 10 million. Yeah. We've talked to, I think we kind of covered it because I think 10 million is a good number because your money earns what is a great life, even if you took very little risk. What if the market underperforms, like Vanguard says? Yeah, but$10 million or a general? That's the beauty of the$10 million is because it's so, even if you use the safe withdrawal, I mean, if you use the, you know, risk-free rate of return of like, you know, of treasuries, I mean, it's still$400 ,000. I mean, you're talking about$400 ,000 or$500 ,000, depending on what money.

2:00:06Graham Stephan:What do you think is the ideal safe withdrawal rate? What age? What age? I mean, three and a half percent. Three and a half. What is the amount? And I wouldn't retire with that. I would want to do a still run a Monte Carlo simulation. So you know what's interesting? I've done so many calculations on this, and it determined that if you want to retire at the age of, I can't remember if I put 36 or 40, it was one of those. And you live to the age of 95, assuming that average lifespans are going up. it told me that to be able to account for the Great Depression, so basically you're retiring the day before everything collapses, it said 2.75 to I believe it was 3.2 at the very most, a variance between that.

2:00:53Graham Stephan:And it said you could actually do a little more if you had a year of expenses in addition to that saved in cash. I think with three and a half, you're still young enough and able-bodied, you can go subsidize it if you really got squeezed. And I want to be, this is something important for the audience to hear in our mind, safe withdrawal rates are napkin math, right? So like what we're doing, I would never let tell someone, Oh, based on a three and a half percent draw rate in this pot of money, you can retire. What I'd want to do is say, okay, you want to retire age 36. How much are you going to spend from 36 to 50?

2:01:26What are you going to spend from 50 to 65? What are you just like, I'd want to actually not just factor in an estimate of the things you think that will happen. between 36 and 95, but realistically put some teeth to it. Okay, you have daughters, great. Are you gonna pay for their wedding? How much do you think a wedding is gonna cost in today's dollars? What do you project that wedding? How often do you replace automobiles? Do you replace them every seven years? What kind of automobile? Okay, you wanna travel. How often do you wanna travel? Do you think you'll be traveling when you're 93? And we would try to, and this is what we do for our clients, get as granular as possible on the things that we can realistically estimate.

2:02:00And then we would reverse engineer using money car analysis. Does this get there? Because what actually ends up happening is it's not a static 3.5 % safe withdrawal rate every year. There may be a season where the safe withdrawal rate is 9.5%, 10%. But then something changes. Spending changes, lifestyle changes, another income source enters. And then the safe withdrawal rate drops down to 2 % or something like that. So it's way more dynamic in practice than it is in like academic theory around safe withdrawal rates.

2:02:29Graham Stephan:How common is it that people run out of money in retirement versus safe too much? But it's always, you know, that's the save too much. Because I think I'm now at the stage with money that you try to figure out, you look back over your life and go, which were the dollars that actually turned into this dollar and which decision was it? And it was all the culmination of all the good decisions together that I don't have regret that I'm going to probably, without a doubt, I'm not going to leave this planet broke based upon all the good stuff. but I don't have regrets or feel like I left something on the table.

2:03:04I know that's not really answering the question, but I'm trying to get to the mindset that I think you have to be careful when, cause so many, so few Americans actually save what they need to for retirement. Even though we showed you with our wealth multiplier, it would take very little, just a little bit of discipline when you're younger to do it. Um, that people aren't even like 60 year olds don't have, you know, what was it? A hundred. And when we did the book tours, like$110 ,000 for was the average, you know, investments for somebody in their sixties, that's way below what they should be.

2:03:32So since we have a problem that nobody has the money, I don't want to say there's, you know, the risk is you're over, you're gonna have too much. That's just a, you're, you're a rounding error statistically that that's probably not the message I'd want to put out. And then the, on the flip side of your question, um, are there a lot of people that would run out of money in retirement? What often ends up happening is nobody, most people aren't like living life, living life, living life, living life, everything goes to zero. What ends up happening is it kind of goes down and they begin having to make sacrifices they might not want to make.

2:04:02Hey, I had a house, but we can't afford this house anymore. So we got to sell it. Hey, I was living on my own, but I can't afford the bill. So I'm going to have to move in with family. And if it gets really dire to devolve in a situation where I don't really have any assets, but I've got social security, I'm going to figure out how can I live on whatever my social security check is. I think that's more the reality. Cause I think the number was something like 60 % of retired Americans right now, the majority of their retirement income is Social Security. Yeah, some crazy stuff like that. Which is sort of a wild thing to think about.

2:04:35So how often do people have to make concessions in retirement they didn't want to make? I think that probably happens more often for the average American to realize because I think the average American is not preparing for retirement the way they ought to. What about lifestyle creep?

2:04:49Graham Stephan:do you see that as being an issue over time? Is it spending a little more, like doing the$200 ,000 cruise? And then pretty soon, I got to do the$500 ,000 cruise. Well, look, lifestyle creep gets a bad rap. It's a hot take. Lifestyle creep is not bad. We actually want lifestyle creep. We want, for most people, to have a nicer lifestyle in our 30s than we had in our 20s, a nicer lifestyle in our 40s than our 30s, nicer in 50s than in 40s. That's your lifestyle creeping. What you can't let happen is let your lifestyle outpace your savings, outpace your building. So, so long as you're continuing to save and continue to grow your pot of money and to continue to build for the future, there's nothing wrong with you buying the nicer home, buying the nicer car, going on the nicer trips, assuming you're doing all the other stuff that you're supposed to.

2:05:34I think far too often people forget that second part and they just let the lifestyle create. I would like to give some old man knowledge though on something. You know, you hear, we talk about on our show, the hedonic treadmill is good things that happen in your life. You should try to spread those out as much as possible so you can squeeze every ounce of dopamine and goodwill or good experience from it. And then bad stuff you should stack up. And what I mean by that is like, you always hear about lottery winners, they go broke. If lottery winners would learn, hey, let's start off with 10 % or something of what you learn, you know, what you, you win and maybe you buy a house and that's it.

2:06:10But usually they want to go buy the house. They want to buy the vacation property, the speed boat, they want to buy the new car. They do it all. And then they, they find out they're numb. You know, all you did was you shot your system because you numbed it. You didn't give yourself any time to absorb and process it. So I always tell young people, as you start making money, don't shoot for the global, you know, international business class. Do it to the nine when you're in your 20s. Go do something, you know, go do Europe cheap because you're at the stage where that's the best. So that way you save something, leave a little bit meat on the bone for your 30s and 40s.

2:06:45And if you can think about your life and creating success and achievements and experiences that way, I think you'll find that you have an appetite for and your happiness and fulfillment will be much better than if you just go run yourself in debt, do the most exotic and luxurious vacation. You know, you might be setting yourself up for just a life that is just not set up right because you did too much too fast. What's the best thing to spend money on? I mean, I look, I'm at this stage where experiences, family, you know, I'm the sentimental guy that tells everybody they should be having a gazillion kids because I only have two.

2:07:20But I also waited five years into my marriage to have kids. And now looking back, because my oldest is graduating, leaving the house, I wish we had more. I mean, because it's just kids are hard. Now, I don't want to misplay because you're in the messy middle. You have littles in your house. It's easy for me at my age to say it's not hard. But I love experiences and memories and doing things like that. Travel is awesome, especially when I can get loved ones. I'll bribe the heck out of my oldest daughter to get her to do vacation with us. You have to bribe her to go on vacations? No, I don't. No, you just meant he wants to go on vacations that she wants to go on.

2:07:52I don't mind. I planned on. And here's a compliment to her. She graduated high school. We took her to Paris to celebrate, graduate. She graduated college. I said, where do you want to go? And I'll write a check, you know, and we've even had more success. I was thinking she was going to choose. she just wants to go to disney so i mean i was like i was shocked because we go to disney all the time so but it showed me that that's where you know you worry about lifestyle creep and stuff people if you want to know the secret to happiness is is the people that you surround yourself in you know all the research into happiness usually comes down to spirituality relationships friends not doing commute commuter traffic and things like that that's where it's not necessarily the the exotic house and the car the biggest thing that shocked me once i got really what i could think would people look at my net worth on paper they'd be like shock and awe is that i realized how empty this stuff was i mean and you you i mean you and i've talked enough that you i think have you experienced any of that i mean it's it's the money i know but i really don't buy that much i know but that's the thing you don't buy that much because you you could you could buy anything I could buy, you could buy any exotic car.

2:09:02You could buy any exotic watch. I just find that I don't get much out of that stuff. I mean, and that's what, it's funny. We've done coverage on this. The billionaires look like they're almost homeless. It's the aspirational people that are typically out there, you know, blinging it up. Because they're trying to let people, they want people to look at them. I think there's something when you have it, it doesn't feel like it's doing as much for you. And you almost are a little embarrassed that if you wear some of those trinkets. I think the best thing to spend money on is stuff that creates memories and experiences.

2:09:33My favorite thing to spend money on is stuff that creates convenience. I just love convenience in my life. So if I can outsource something or add some sort of efficiency, I'm willing to like spend money for that thing.

2:09:45Graham Stephan:That's what Jack has really been trying to hammer in me. I remember this stood out where he said, I was comparing, it sounds so dumb. I was comparing two dentists. One of them was expensive, but was really close by, could do everything in one visit. The other one was half the price, but I'd have to go back twice. And I was, because they had to do x-rays. And also explain, let's do this one. Let's talk. So how much was the more expensive one? Like$300 more expensive. I would go to the one that could do it all for$300. And then the other one, how far away was it? Oh, an extra 15 minutes. 15 minutes one way?

2:10:18Graham Stephan:Yeah. So it's two visits versus one. Yeah, it's with two visits on two separate occasions. And then one is how far? Eight minutes away. Eight minutes away? So, and one visit and it's$300 more. If I can afford the convenience, I'm going to go with the convenience. Yeah. I went with the more expensive one. Great experience. Your time is worth a lot of money. The value of your time is worth a lot. That's the other thing I've learned is that, you know, when you're younger, you are literally trading your time for wages. And as you get older and successful and you realize, holy cow, I don't have that much time left.

2:10:51You understand the value of your time. Start trading your money for time. You trade, you definitely trade your money for the time. And that's why the experiences and other things is because it's not forever. And it goes quick. I mean, I called a dear friend of ours. His birthday was yesterday. And we talked on the way in and he was like, yeah, man, it feels like the years go faster and faster the older you get. He's in his 70s now. And so I cherish the time I get to spend with people I care about. And that's why I'm on the old man tour now. I go on a spring training with my high school buddies.

2:11:24I go, I'm trying to get my college buddies. It's an act of Congress to get my college buddies to get together. But then every year I go on a golf trip. I play golf once a year. It's with my old neighbors from Georgia. We go down to Florida and we play rounds of golf together. Love that. It's important to make time for memories.

2:11:42Graham Stephan:Graham, you should show them your portfolio. Let's do it. Now you guys are going to react to all of Graham's investments. Obviously no numbers. Just say what you think. After seeing how you, I hope you, did you keep track of what you gave on the previous score? Yeah, I gave him a 7.5. You gave Jack a 7.5. 7.5. Because I can see how Jack and Graham are. They're going to be mad at whatever. Or whichever one gets a better. Whoever loses is going to feel slighted. No, I already know you guys are going to agree more so with Graham. It's okay. But we gave you a high score. Why are you doing that? We were not.

2:12:12I'm not upset.

2:12:13Graham Stephan:Yeah. I'm actively choosing every day when I wake up to have a portfolio that looks like this. So I'm not. You're way ahead of the curve. I'm completely unbossed. By the way, I'll go ahead and tell you, if you want us to give you a prospect kit, we'll give you a prospect kit right out in the lobby as you leave today. He just said he's one of those lifetime do-it-yourselfers. I know. I know. Look, I'm open to anything. I love it. Okay. Now you can open up and see all the different accounts. Is this the biggest one? No, here's the first investment account. Oh, this is all of it. This is him playing around.

2:12:41All right. There's some stuff in there. Robin Hood, you're basically, that's your speculative play account. Yeah, for the most part. A lot of guys getting in on this. Go to the big stuff. Go to the big stuff. It's just an interesting to note. Here's a$1 position. Here's a$5 position. Here's a$6 position. Those are probably the free trades that they gave them. Those are the free trades, aren't they? There's a$6 position and U.S. dollars. There's a$7 position. There's a$12 position. So one of the things I'd probably do is clean up a bunch of the single-digit dollar positions.

2:13:09Graham Stephan:Oh, some of those I can't close out because they're worth so little that I tried to sell them, and they won't let me sell them. So I actually have to go and request this thing from Robinhood. Or donate them or something? Yes. 0.0, 0.35, share. Okay, so just ignore those. But go look at his big stuff. We're assessing the whole, you have to look at the whole picture. That's the thing. Your big assets are the same thing. I mean, they're in tried and true stuff. I mean, so you resemble. But I think this is making our point because everybody here, we have decent investment portfolios, everybody at the table, and we're all behind the same similar market type stuff.

2:13:43And that ought to be something for the audience to take a big note of. It's to be like, here we are having all these pontifications on the investment marketplace. But if you actually look at what money we're going to live off of in the future, it's the broad markets. So you just have like a number of different accounts that could likely be consolidated. I'm sure there's some strategy to that. Are we talking about the investment accounts? Yeah, there's like just a couple, like there's a couple of different investment accounts. Did you have like affiliations or do programs with some of these things?

2:14:09Because you do have a lot of different companies.

2:14:11Graham Stephan:I use them all and I've just kept the investments in there and they've grown since 2017. Is that because you were curiosity or you did something with these companies? No, a lot of those were me just trying out different brokerages. Because back in like 2017, I would go and make accounts with every single brokerage out there. Yeah. Yeah. And I would use them. Does that drive you crazy? It drove me crazy. I had accounts at every single brokerage. Because I closed them all up. The older get, I want more simplicity in my life. I'm merging a few of these, but I have different accounts for different purposes.

2:14:38Okay, you've got a health savings account. Love HSAs, right? You have like$3 ,600 of cash in your HSA?

2:14:44Graham Stephan:I just forgot to invest it. but that's he's gonna have a hard time beating seven and a half eight you know what I mean I know but it is it is it is I mean because I was gonna pick on because I was like man that's around no that for that account size that's actually pretty decent size that left a lot of cash that would work there's no there's no positions in this one so is that just cash it's your it's your Roth there's no positions in here I didn't probably translate over from that brokerage I really want to see that one okay we want to make sure that's what I was talking about that's V-Phyx in the Roth oh is it all of it okay great the entire okay that's great um the acorns account can't see any uh cannot see any holdings in that one either yeah that's four etfs in that account okay good ones or bad ones good ones okay yeah they're all they're all like vanguardic okay yeah all right that's fine you don't even classify yourself as an exotic talk about a snooze fest right yeah actually i probably i mean it could just it could be a little bit cleaner.

2:15:44Like I just feel like there's some account consolidation. Like if you were a client, I'd be like, Hey, why do you have all these different accounts? Why do you have all these different positions? It might be easier to get your head wrapped or anything and not because what's it, what's interesting is, okay. Oh, I forgot to invest that$3 ,600 of cash. Well, $3 ,600 of cash can turn into$13 ,000 of cash just because it didn't 13 ,000 turn into 30, 30 can turn into a hundred. Like it just, it happens that way pretty quickly. If you have so much stuff, that's hard to keep an eye on where it's also easier to compare to know annualized performance or how well you're doing when things are consolidated.

2:16:14Because you've got stuff, I mean, now I'm sure these things are going to spit out a report somewhere on here where it would tell you, but it's just, there's a lot of scrolling.

2:16:21Graham Stephan:I have like 12 1099s from different accounts. Just the other part. And like, does that not like bother you a little bit? I keep track of them all and then an accountant does it all. Of course you do. I think you're naturally good at this stuff, but that doesn't, just because you have a way of doing this, I don't know that I think it's the most efficient use of your time either. Now, that's a, okay, so that's a big one. It seems like, maybe not enough to total net worth, but it's like, you're pretty bullish on crypto. Yeah. Yeah, but it's still under, I think, 12%. So how much is he up? Does it show how much he's up?

2:16:55Because we don't have to give the number,

2:16:56Graham Stephan:but it was, does it, you know how much you're up? Total, I'm up maybe right now at these levels, like 6%. Okay, okay. Maybe 10. Which is surprising because it's a decent size holding to hear you're only up six percent kind of surprises me because i have a lot that i bought in 2017 and then a lot that i was buying in 2021 to three four like more like dollar cost average so do you think bitcoin's gonna change the world like i would for the term of like there's an asymmetric upside that it will do better than it will do worse what about all the quantum stuff that people are out there throwing out there is risk bitcoin would be able to change the way it's secured to be quantum resistant.

2:17:41Graham Stephan:I don't think it's going to be a risk. And I'm not saying that's a risk. Because banks are going to have to update this too. We all have these headlines thrown across our, you know, our feeds. Well, banks would have to update as well. So it's like, you know, would banking be a risk? Yeah, it's just a lot of... And those computers don't necessarily exist yet. Yeah. Like you have some positions that are like pretty substantial and then you have some positions that are just very small, relative. Right, like... It's more of a wrangling issue for you, Graham. Yeah, like I just... I got some thoughts on that.

2:18:07Yeah.

2:18:08Graham Stephan:So what would you rate my portfolio out of 10? You get now, remember, you gave Jack a seven and a half. I have a number. I think you want to say and I'm curious. Don't do it because you gave me a seven and a half. Just do it independent of me. But you have to know where the scale is. I like your overall allocation much better. Like I think it's, it seems to be a more well thought out, more robustly diversified portfolio, but it's a little bit sloppier in terms of like cleaning up some stuff, right? So. Well, when he says that, I think, well, I'll let you be, because I would skew it. I was talking about the quilts of life.

2:18:44Yours is out of choice, is that you have assets all over the place, you know, different providers. And you said that you went on a journey trying out all the big providers. And I think probably from a content creation standpoint, that was great. But just ongoing, I would probably try to consolidate to simplify your life so you own more of your time.

2:19:04Graham Stephan:And by that, you're saying close down a lot of these brokers. Yeah, what do they add about you? Collapse into war. If you don't have a business relationship with them and you don't, you know, then why make it where you have to do more compliance for accounting purposes and more, just keeping up with it, worried about access and everything else that comes from having more accounts. Was there a retirement account in there? I don't remember seeing a retirement account. There was, no. Was there a solo? There was just a Roth IRA that I had set up. No. What are you doing? I just figured. You won't pay your taxes.

2:19:35Graham Stephan:My honest thought was, I think that, you know, I didn't want to do a 401k because I just think taxes are going to be going up substantially by the time I retire. And I would rather just pay the tax today. Okay. In terms of like a Roth. 401k. Roth 401k. I just. I don't think it makes sense for you. But if you're going to take that stance, do a Roth 401k. Because you know what's cooler than taxable assets? Completely tax free assets. I thought about it, and then I was just like, well, I just kind of want access to it now if I wanted to. You just said you don't touch it. You literally said you don't touch it.

2:20:08Graham Stephan:And right now, you have access to capital. Like, we just saw your accounts. You have access to capital. So starting today, starting yesterday, it'd be sort of insane not to start building up 401k, solo 401k assets. You got to give me a rating. Give me a rating. Okay, this is what I want to say. I'm going to give yours an eight. Wow. I'm only 0.5 higher than 10. No, I was thinking the exact same number. I didn't want to color his answer, but I was thinking the exact same thing. I'm going to give a seven and a half because yours feels a little more emotional. By the way, seven and a half is great.

2:20:47Emotional? Meaning you love your portfolio. Like you make your decisions based on emotion. This is, you said every morning I choose to, that's not a negative thing. Your emotion is I like being a more person in the portfolio. Only for a small portion, by the way, as we've discovered.

2:20:58Graham Stephan:I completely disagree with that. And then yours is a little more well thought out, but it's just a little bit sloppy. It could be consolidated. Both of you just are missing some tax opportunities. Like there are like some huge opportunities. So that's not really a portfolio rating. It's more like a financial planning rating. Man, there's some stuff that you could be taking advantage of. So the only thing I should be doing on that though is just not the Roth 401k. Well, I think there's probably a case in May that you could do not only a solo 401k, not only load that up, But you could also look at some sort of cash balance plan, which is another way to defer hundreds of thousands of dollars.

2:21:33Graham Stephan:I think taxes are going up, though. So, like, I don't want to defer anything. Like, I'd rather just pay the taxes now. Like, I see. You can still do the Roth. You don't have to go as big as these numbers we're talking about. But from a legacy standpoint, you could still do some Roth planning. Okay. Let's assume for the moment that tax rates are going to go up. Yes. Do you think that, so we operate in a progressive tax system. And so a lot of people think, okay, well, taxes are going to low. That seems likely. Do you think that you're always going to be in a position where even if tax rates go up in mass, you're going to always be in the highest tax bracket?

2:22:09I think with appropriate and proper planning, that doesn't have to be the case, only because we have clients that live in that world. The only thing I will say, because I do think at the level Graham's at, that he is probably going to be in the higher tax brackets, but it's more of the opportunity cost of what you could do with the money yourself versus giving it to government right now. Because that's really what also we're talking about. If you could save a few hundred thousand dollars off your taxes now, that's money you get to keep in your back pocket and deploy if you want to. Now, that's the thing.

2:22:40I still don't have the why figured out for you because I think that I would want to have a lot of discussion on what you're trying to build for.

2:22:47Graham Stephan:He's too busy to be a real estate professional right now, but maybe at some point in the future, if his work slows down, that he could become a real estate professional take a bunch of paper losses and that's when he can just oh i never want to touch real estate ever again i'm done with that you really think you're done with real estate which is which is so interesting to me it really is nope i want nothing to do what what soured you so much a lot of besides the timing yeah a lot of los angeles the illiquidity of it like right now i'm in the process of listing and selling two properties and the amount of time and work it's taking to be able to get those ready to list.

2:23:22Graham Stephan:Because I don't want to list a place that's like, not to say falling apart, but sloppy. I don't want people to go in and there's like peeling paint. Like I'm spending maybe 80 grand this month fixing up these places. Just to get it ready to sell. Just to get it ready to sell. And it's not only that, but it's also dealing with contractors and dealing with, oh, what's the staging quote coming in? Are they doing this? or that should have been done. I caught a few things that should have been done that weren't. It was different when I was 25 and I had the free time and all I was doing was real estate.

2:23:56Graham Stephan:It was really not difficult for me to manage these properties. Like I was in the areas anyway. Well, so money was so much less expensive. The prices were so much. The economics were so different. And for my time, it was valuable. Like I showed up every single day to every job site and I was there at 9 a.m. And when they weren't there, I'd give them a call. Where are you? Why aren't you here? I'd be stopping by like after work. And I loved it. I had so much fun. Now that's a pan in the ass. Like now I couldn't. It's a young man's game. Yeah, exactly. So is there anything you'd recommend me doing differently besides opening up a Roth 401k?

2:24:29I didn't do the math. Because you had so many accounts, it was difficult for me to do the mental accounting of how much of your portfolio is like risk on, risk off. Right. Like I saw some risk off more conservative positions, but I didn't have like a good asset mix. I'd want to be able to figure out what those numbers were. Under 12 % is risky. So, uh, under 12 % is risky. Yeah. That, that's basically the crypto. So I would say like risk off more would be like fixed income, bond holdings, that sort of stuff. Like, you know, is your, is your portfolio?

2:24:59Graham Stephan:It's 75 % equities, real estate, 25 % treasuries. Okay. Great. So, um, that's, you know, given the size of the portfolio, probably not crazy, maybe even a little bit more conservative than I would have thought at your age, but not awful I didn't see a clear performance metric for either one of you across the whole portfolio. So one of the things we like for our clients to be equipped with is like every report they get or even on the portal they see, they can see exactly what their portfolio, the whole thing, all of the accounts have done year to date for the last one year, last three years, last five years, since the day they started working with us.

2:25:32So even though we see the portfolios as they exist today, what was not clear to me in looking at it is how effective of an investor have you been over the last five years?

2:25:40Graham Stephan:I actually don't know how to create that with Schwab because I had all of my money spread across a few brokerages. But then about eight months ago, I consolidated everything with ACATS transfers into Schwab. And so it's kind of hard to track my actual performance. Yeah, they count that as like your gain. Exactly. And every time my monthly consumer. Well, they reset it. I mean, it's into their system. Because what they do is a lot of these brokers, they focus so much on short-term performance. I will show you what you're doing for the day, what you're doing this quarter so far. We want our folks to have a much longer term view.

2:26:09Hey, how much did I start with? How much have I put in? How much have I pulled out? The other thing is the basis tracking too. You can't toggle principle off. We help our clients, because we're tracking all that stuff.

2:26:19Graham Stephan:Yeah, Schwab is good about tracking basis. But if you're consolidating. That's the part. Performance is lacking. Well, they include the principle. Yes. Which I wish you could just toggle that off. Yeah, I wish. I wish too. Yeah. Charitable giving. I didn't know. I didn't see it. Do y 'all ever consider donor advised funds? Because I saw gains in there. You could do donor advised funds if you're charitably minded. I forgot to look for a lost position. I was so blinded by the$3 positions that I didn't look for losses to see. Well, there's also a lot of it. If we had gone through every one of your accounts, this would have been a full three-hour audit.

2:26:50I mean, there's a lot of accounts there. It really was. I mean, it was scrolling. But you're both, by and large, you're both doing the big things right. Neither one of these were dumpster fire portfolios. Neither one of them things would give us a whole lot of points. We could give both of you prospect kits and feel really good about it.

2:27:05Graham Stephan:So Jack and I are actually working on a side business. because for us to be in front of the camera all the time indefinitely, it's not going to happen. It's not feasible. So we want to build something outside of the iced coffee hour. And we were spitballing back and forth a while ago what good ideas are. And one of the things that we kept coming back to is the fact that people who open credit cards have these rewards that they are either unaware of or they just never utilize. Like there's like a Saks credit and like a Dell credit. And they all expire on different time horizons. So you have one that expires.

2:27:36Graham Stephan:Let's see you get two per month. Maybe you get one every three months. Maybe you have one semi-annually, one annually for all of these different websites for different amounts. And so what we decided to do was consolidate every single credit card bonus credit discount benefit all into one dashboard. And then it'll send you notifications when something is expiring according to your liking. So if you want notifications, like a lot of notifications, very little notifications, it'll just kind of tell you based off your preference. Hey, by the way, here's a link to Saks Fifth Avenue. just click it and use this card at checkout because you have 50 free bucks that's expiring in a week.

2:28:10Graham Stephan:How difficult will it be to keep up with the rapid changes that take place? It's very easy. There are already things that exist online that can scrape all of that data and just immediately. Yeah. So it's 99.9 % accuracy, the software that we're using for that. But the main idea is that people will pay$900 a year for like the Amex Platinum or whatever it costs, but not use resi credit that comes a hundred dollars every single quarter,$400 or Uber. That's true. I've fallen all the time. What I do is at the end of every single month, I'm like, oh crap, I have an Uber credit. And so I just Uber eat some food because I don't even need it because I want to use it.

2:28:48Graham Stephan:Same thing. I forget that my Amex gold has benefits. So what is this a membership thing? How do you, so it would be a membership thing. So people could link as of right now, the concept, people could link a few cards for free to be able to try it out. And then if they want to link more than that, there'll be a small fee with that. But it'll also tell you which cards you should be using for certain purchases. And it'll look through your transactions and tell you how much you missed out in rewards by not using the appropriate card. And will it update like rotating categories? Like some cards? So also like if you go through the Chase portal with different Chase credit cards, you know how they have like the discounts and promotions tab.

2:29:23Graham Stephan:So like if you're expiring at the end of the month, you get 10 % back at Lululemon up to$50 back total. so$500 total expenditure. So it'll also determine, hey, on this card, you're spending Lululemon quite often. But on this card, if you just click and, what is it, like accept the feature lemon. Oh, yeah, exactly. You have to opt in. You have to opt in for the discount. And that's the thing. When you look at the offers on Amex, there are hundreds of them. And you never go through, it's like, oh, Home Depot's offering$5 off. And it doesn't tell you, hey, you shopped at Home Depot and you didn't opt in.

2:29:53Graham Stephan:Exactly. I have the Amex plan. It could also just link you and say, hey, just opt into like these 30 because you shop at these 30 places across these cards and then like it'll just yeah interesting so we bought the website extra dollar like extra dollar dot com nice I like it we're working on it so we're working on it so if anyone wants to sign up for the wait list and get first access to be able to try it out it's extra dollar dot com e-x or the letter x e-x-t-r-a-x-t-r-a-l-a-r yeah like actually written out extra dollar extra dollar dot com love that because you get to save an extra dollar extra dollar or more terms apply Extra dollar plus.

2:30:30Graham Stephan:Yeah. Cool. Well, thank you guys so much for coming on the Ice Coffee Hour. It's always a pleasure. Thank you for the team for all sitting in on this. Thank you for letting us use all of your equipment. This has been such a blast. I love it. I've been looking forward to this. Me casa, su casa. We always have a blast, really. And you guys, I love the dynamic. I mean, I think Bo and I pick on each other. You guys also pick on each other. We were joking earlier. We were saying, like, Jack and me. Oh. Yeah. That's kind of the way it works. All righty. Well, thank you guys. Thank you guys so much for watching.

2:31:00Graham Stephan:We would not be here if not for you. We flew all the way out here. Okay. The flights were expensive because gas prices are going up like crazy. They were expensive. The flight was twice as much as it usually is. So if you appreciate that, just hit the like button, subscribe. We'll link to all of your information down below in the description as well. Thanks, guys. We always have a blast. By the way, if you enjoyed this episode, we just posted our next one early for members. So if you click the join button, you could literally begin watching our next episode right now. Really hope you enjoy it.

2:31:30Thank you.