The Pursuit of Meaningful Wealth ft. Khe Hy (EP.151)

0:28We all need to make smart decisions with our money. founder of Rad Reads and host of the Examine Life podcast. I've been following Kay's work for probably a decade now, always centered on living a productive, joyful, and examined life. And I was really excited to have him on the show to talk about the pursuit of meaningful wealth by balancing money, time, and happiness. As always, you can find links to resources mentioned throughout the episode at thelongterminvestor.com. And without further ado, here is my conversation with Kay He.

1:04Kay He, welcome to The Long-Term Investor. Great to be here. Thanks for having me. Well, you've been someone I have had on my list of guests I really want to have on the show for a long time, in part because I followed your work for so long and watched it evolve. For those who are listening or watching that aren't familiar with your work, maybe you can give us a little sense of how you started Rad Reads and how that has evolved over time to where you are today. Amazing. Yes. So I'd start with Rad Reads. My venture into the internet, the online world is, I would say, my second career, where my first career was working on Wall Street.

1:45I was on Wall Street for 14 years. I was one of the youngest managing directors at BlackRock doing alternative investments in New York City. So I had what's hopefully not a midlife crisis, a third of a life crisis at 35. And I asked myself, like, what am I doing here? Why am I going through the motions in my life for a nice, very nice paycheck? And I quit without a plan. So this was nine years ago. And this was when Rad Reads begun. I'm a surfer. I'm a skater. I grew watching the Teenage Mutant Ninja Turtles. I wanted to give any excuse to have people use the word rad, especially crotchety, curmudgeon-y old white men in financial services.

2:24So I quit without a plan and I had 18 months of runway to figure out what's next. I didn't have a following. I didn't have it. I mean, keep in mind, this is nine years ago. This is pre-substack, pre-a lot of things, pre-Instagram stories, just to give you some context. So I just started writing. I started writing, basically saying how I was a quote unquote successful 35 year old person who was feeling very empty inside. I just had a child and I wanted to figure out what's the point of this all? What's the point of making money? What's the point of getting promoted, being seen, getting bonuses, getting fancy titles?

3:03And it turned out that I wasn't the only person who had these questions. And so the writing, I started writing as an email newsletter. I've written an email newsletter weekly ever since. That has evolved into blogging, to social media, a lot of words-based writing. Over time, that evolved into podcasting, YouTube, video shorts, things of that nature. But really, it's always been around these questions of how do you lead a more productive, examined and joyful life. So that's kind of how RadReeds started. There have kind of been different phases of evolution there. And maybe I'll give you the main one, in my opinion.

3:46I would say that the main one was when I started RadReeds, it was really more tactical. So there was a heavier focus on personal finance, productivity, and career building. I have always thought, and you've been reading for a while, so you might think differently or concur. There's a joke, which is come for the productivity, stay for the existential. So I have always used tactical subjects to really rope people into more meaningful questions. So it'd be like, yeah, this is how I made this much money working on Wall Street, but do you want to leave your kids an inheritance? So like that would be the hook.

4:29And when you think about like leaving your kids an inheritance, there's like a million different sub questions like, what's the value of legacy? Do I want my kids to have a really good life? How do I teach them struggle? What's the point of resilience? Like it's a much, much more layered and complex question. But I would say in the first probably seven years of Brad Reads, it was productivity, money and career. I needed to kind of lure people in. The last one year to 18 months have been around just being like, I don't even want to trick you into the conversation. It's like, how do you lead an examined and intentional life?

5:05And that has led us to, in the earlier days, we kind of monetize with more digital courses, productivity courses, things like that. More your typical info products business. And now it's much more hands-on. We do one-on-one coaching, group coaching, masterminds, and small in-person events. Well, the background's really helpful, I think, if people aren't familiar with your work. So thank you for that. And I think the shift that I've seen in your writing and your content, as you describe, is a shift that I don't see just with you, but more broadly, because a lot of the X's and O's of personal finance, of investing, of money, it's sort of like that problem has been solved.

5:44That is something where that information, despite being one of the people myself who continues to share that information. Maybe the problem has been solved, but not every person has sought that answer yet. These softer questions that are harder to answer and take more self-discovery, take more exploration, seem to be what people want. And it's just more intellectually stimulating for you or I to create that type of content. A lot of what we're going to talk about today is focused in on wealth, but just kind of balancing money, balancing money with happiness in time, I kind of drew from a number of my favorite things that you've written.

6:25I wonder if you could start by sharing the moment you realized, for example, that not all hours are valued equally. What really led you to explore the value of time? Yeah. So I think that for a long, long time in my more tactical phase of my writing career and just being younger, it was all about efficiency. So it was like squeezing water out of a stone, right? And so that might be things like having a text expander, or I'm going to date myself, but I created a shorthand language on my BlackBerry. So instead of writing that, I would write TT and it would spell out T-H-A-T. So I had this whole shorthand just so I could save 10 % of my time in writing BlackBerry emails, again, dating myself.

7:11But there's this famous quote is like, if the ladder is pointing in the wrong direction, it doesn't matter how fast you climb it. And so you can have all these efficiency tactics, but if you don't actually know what they're in service of, where they are taking you towards, you're actually missing the picture on your entire life. You're rearranging the deck chairs on the Titanic. And so what I realized was that there were these really, really, really powerful decisions that you can make, these little actions that you can make that were infinitely more valuable than like a text expander or just like little fancy doohickey system that would allow you to do things a little bit faster.

7:58And so where it really, really hit me is that over the years, so I write content all the time. I'm always creating content. over the years, a bunch of reporters from major publications have started to follow me. And sometimes they'll DM me. Sometimes I'll just find out through Twitter or things like that. But one thing I learned was cultivating friendships. And this isn't like transactional. It's like actually being helpful to reporters. So like every three or four months, I reach out to different reporter friends. I'm like, hey, what stores are you working on? You know, I know a lot of people.

8:32I have some insights myself, anything I can support. It's not like write about Kay, write about me, nothing to do with me. It's like, how can I support you? But guess what? We have had incredible press coverage, right? We've had CNN, Barron's, Wall Street Journal, Business Insider, CNBC, like closest front page type stuff, zero PR agencies, zero. And that has been the result of like a one minute email to a journalist every four months. So that's a collective in the history of Rad Reads. That's a collective like one hour of emailing that has landed us front page of like close to 10 major publications.

9:17Well, that's a great example. And I think for those who are listening to us and see their peers in the media, perhaps something they can consider if it's something that they've always wanted and not exactly known how to hack. And you were mentioning that kind of came out of your talking of productivity and being productive for the sake of being productive, which I think a lot of people early in their careers, the only why that they can attach to their productivity is probably money, is financial gain. but you've written about how there's a diminishing return in your happiness from money. Can you explain the concept of that marginal utility and how it applies to personal finance in your mind?

9:59Yeah, absolutely. So some people say money has negative, it like slopes downward, but let's just use a very simple example. Elon Musk, richest man in the world, what's he worth? Probably $500 billion, I don't know, hundreds of billions of dollars. If you took the 10 smallest companies in the S &P 500 and just put them in Elon Musk's bank account, he wouldn't even notice. So let's say that those five smallest companies are collectively worth$500 million. You could give Elon Musk$500 million and he probably wouldn't notice. So that just goes to show that at some extreme number, having more money is actually like, it might actually be annoying to him because like another tax form to fill out.

10:50So at some point, the value of the next dollar is zero. Now, you, me, our listeners and so on might be saying like, well, yeah, that's Elon Musk. What does that have to do with me? So let me ask you a question, listener. Let's say that someone would say, I'll give you$10 ,000 a week, but you have to do five hours of data entry on a Saturday. $10 ,000, that's 120 grand a year. Five hours, objectively, is not that many hours. Five hours on a Saturday, that's close to 50 % of your waking hours on the weekend. So everyone's going to have a different, like I would say no to that. Would you say yes or no to that?

11:35I was giving it hard thought. I think I would say no, but there are a lot of points in time in my life where I would have said yes. Absolutely. Just like Elon Musk, at one point in his life, if someone's like, here's a company, you can have it for free, it would have like made a huge difference to his life. So everyone hits that curve at different parts of their lives. It's not an absolute thing. Like some people have more expensive tastes. Some people are digging themselves out of a bigger hole, right? Like more student debt, or maybe they grew up in poverty. So like in someone versus someone who grew up with a silver spoon.

12:14So that curve is going to be different, but the curve flatlines. And it doesn't go from like, oh, I don't want that dollar to I want none of it. It starts to taper off, right? So that's one thing to just keep in mind. And it's just people should have the awareness because you're actually being faced with that decision often. Think about this. You could be, I'll just use Wall Street numbers. You could be a director at a Wall Street bank. Director on a Wall Street bank might make like$500 ,000. You could be promoted to MD and you'd make a million. but the MD might actually travel three days a week for the whole year.

12:48So you're actually making that same decision as the data entry on Saturday, just under different packaging. And guess what? Most people are not stopping to think about that. They're just full bore ahead. So they've missed. It doesn't mean that they should not take the promotion or take it. That's not the question. The question is, are you aware of the value of your next dollar? So here's what typically happens. The person would say, let's go back to the data entry one because it's very simple. They're like, OK, well, I'll take that 10 grand because I could use it now and I can free up more than five hours in 10 years.

13:31Right. I can invest it. I can build a house, whatever. Totally fair argument. However, a lot can change in 10 years. You could die. Well, and your identity changes over time. You might want totally different things in 10 years than you want today. Your kids will be in college. I think about this often, this concept of the magic window. It's like my kids want to spend every moment they have with me. That is going to change. So my relationship with time will change. when my daughter's 15, she's not going to be like, I want to spend 12 hours with you, dad. So I'm going to get maybe not 12 hours back, but I might get nine hours back on a Saturday in five years.

14:17And that will be sad because my daughter won't want to spend 12 hours with me. And that would be awesome because now I can go surf. I feel guilty surfing on the weekends because I want to be with my kids. So a lot of people were like, well, I'm going to take the money now and I'll buy back the time later. And again, that's not a bad idea, but remember, the more retirement is the classic example of this, right? I'm going to work really hard now and I'll buy back the time at 59 and a half. Well, guess what? Surfing as a 59 year old sucks compared to surfing as a 30 year old. So that time's not the same time.

14:54You're not buying back the same time, right? You might have hip surgery by the time you're 59 and a half. Can't even turn on a surfboard. Can't even get on a surfboard. You'll be forced to just play golf with me. But even then, golf gets hard on the body. I mean, you're right. The relationship with time does change. And at PlanCorp, we're working with lots of people planning for retirement, in retirement, and they're always talking about maximizing their life experiences. And you see so often that people are doing all their best travel when they're later in life. My wife and I try to travel as much as we can.

15:29We're 40. And the things that we do on travel now, we just took the kids dog sledding. Incredible. Will I want to do dog sledding in my 60s? I don't know. Maybe I will. Will I tell the guide, make it as extreme as possible like I did when I just went? Probably not. And I think in general, you spend all this time so that you can retire. And then when you retire, you sort of get worried about running out of money. How do you think about this? like the desire to fully live, have these full experiences with these competing financial interests at different points in time? Yeah, it's a great question.

16:07I think that at this point, we have to talk about the scarcity mindset. Because for those who aren't familiar, should I briefly explain what I mean by that? Yeah, please. Why don't you define and then go into it? That'd be great. Okay. The best way to define it is I have a client of mine. He sold a company. He's 40. He's a serial entrepreneur and he netted$50 million after taxes. So, and the guy is fricking smart. He's a beast of everything. He is scared that he might do something that will financially ruin his family. And I'm not talking about Coke and hookers. I'm talking about like trippy. I don't even know how it could happen, but like maybe like staying at too many fancy hotels, but like$50 million, just off the interest, you could stay at all the fanciest hotels in the world forever.

17:00But that's the thing, is that loss aversion would be another derivative of it. This is particularly true for people who grew up lower middle. I mean, in poverty, I can't speak. I grew up lower middle, so I can't speak for people who grew up in poverty. But people who grew up with less money always have a fear of going back. And that fear oftentimes times, actually professionals like you can help people with those fears. But just because you can give a spreadsheet to someone and be like, hey, this spreadsheet shows that you will never be broke, doesn't mean that they trust it, like in their core.

17:36And a lot of people, and this is particularly acute for people that didn't have money and now have a lot of money because they know what it's like and they're terrified. So with that scarcity mindset in mind, you have to understand that you're always living with a irrational fear. And so what happens then, because you asked the question, well, how do you like balance? I forget exactly how you framed it, but how do you balance enjoying today with like future commitments? Well, I want to say, first of all, you need to overcome that fear that you're going to lose it all because you actually will never enjoy today.

18:13If you're always scared, you're going to lose it all. And we could talk for hours. You don't solve that fear with another spreadsheet or PDF. That fear runs deep into your soul. It's the how you were parented. It's childhood traumas and experiences. It's the way you see your self-worth. It's the way you think you're valued, so on and so forth. So that would be the first way to learn how to enjoy the present is to stop worrying that you're going to irrationally lose it all. Like again, if you have different addiction problems, that's a different story. We're talking with people who are functioning normally in society, right?

18:51Or healthily, let's say. So then there's a question of balancing today versus tomorrow. And so let's think about it. Let's use a very real example. My kids still like Disney. We can go do Disney, do that. And maybe it's like, I mean, we can drive to Disney. But let's say we have to fly to Disney. Like the whole thing might be like seven grand. Seven grand. Or I could put in seven grand into the stock market. And then I can compound that rule of 70. So every seven years, it doubles. So in 20 years, it will triple. So seven grand will become 21 ,000. Okay, so I have$21 ,000 in 20 years, or I can go to Disney with my kid today.

19:32Again, I'm not saying be petulant and irresponsible, but at some point, you have to ask yourself, like, what's 20 grand worth to me in 20 years? 20 is a lot. Like you could be dead in 20 years. Probably not you and I, hopefully not you and I. Hopefully not us. But it's possible. I mean, anyone in their 40s have lost friends prematurely. Yes. So there is that tension there. And again, I think that there's a few ways to overcome it. One is through, and this is the message that we always preach is like, how well do you know yourself? Right? Like sometimes people will be like, well, I have to take my kids to the four seasons because they have the best pool and the best food.

20:19It's like, well, is this for the parent or is this for the child? Because every child I know just wants a diving board and an ice cream sandwich and chicken fingers. Definitely chicken fingers. Yes. Yeah. I mean, I'm sure you've stayed at fancy hotels. your listeners, like, why do I need to pay 25 bucks for chicken fingers and French fries? And by the way, they taste worse because they're healthier. Like they don't taste like McDonald's chicken fingers or like microwave. So again, you could say like, well, it's all about being honest with yourself. Kind of like the data entry question where it's like, well, I want to stay at the Four Seasons because I work hard.

21:01Sure. Like that's your right. But don't go saying that That's what your kids want. Your kids want your time. They want you off your phone, doing cannonballs off the diving board with you, eating chicken fingers and ice cream sandwiches. They don't want the white tablecloth dinner that they have to put a blazer on just because mom and dad like caviar. Well, fortunately for my kids, dad does never want to wear a blazer. But, you know, it's true. Drew, I think it's something, again, the high productivity, high achieving person, it's a trap that they fall into. There's something that you write about the when then trap and sort of its impact on the pursuit of happiness that I think is sort of connected.

21:51Do you mind kind of explaining that and then sharing your view on how individuals can escape that mindset? Yeah. All right. So the when then trap is basically a mad lib, which is you fill in the blank and you say, when I have X, then I'll be happy. So it's this kind of conditional form of happiness. So what is X? I have asked people X, what is X so many times. But actually, before we even go to that, there's this classic study where they ask people with a million dollars. They say, how much more money would you need to be a 10 out of 10 on the happiness scale? And a person with a million dollars says double.

22:30Then they ask a person with$3 million, how much more money would you need to be a 10 out of 10 on the happiness scale? And the person with$3 million says double. Then they ask a person with$10 million, how much we, it's always double. So it's in our wiring that we always want more. And by the way, this is a lot like alcohol. Like, ooh, that one drink tastes good, but you're drinking the one drink thinking about the second one. And so these addictive things bring us this temporary sense of satisfaction, but then we want more. So I ask people, what is X for you? When I get X, then I'll be happy.

23:05It's like making six figures, making seven figures, making eight figures. Well, you don't make eight figures, but you know what I mean. Then it's running a half marathon, running a marathon, running an Ironman. It is getting promoted to VP, director, managing director, principal. It is buying an apartment, paying off my student loans. It's filling up my kid's 529 plan. Guess what though? The goalposts always, always move. Because what you actually enjoy is the desire for the outcome. It's not the actual outcome itself. It's the anticipation for the event itself. So then you always, always need more.

23:48So how does one overcome that? The first is to just pay attention when it's happening. And you could see that with like classic example is imagine your first car and imagine your recent car. The recent car is probably way more expensive than the first car, right? Maybe you have a Tesla. And then the first car was like, my first car was salmon covered 1993 Honda station wagon. That was the bad boy that I was driving around the college campus in because my parents gave it to me, but it was the best car ever because it was freedom. I feel like you also could have pulled that off pretty well. I bet you had a good vibe for it.

24:27Thank you. And I'll show you the receipts. They're not pretty. But the first is just noticing it. Noticing that you used to be happy having a PBR with your friends and now you need to have$15 cocktails at a hotel bar. Noticing that the clothes that you wear, the watch that you wore, whatever, just paying attention to it. That'd be one thing. The second one, though, is actually much more complicated and nuanced. And it really has to do with this concept of self-worth. And so what is happening is in these examples is that you're accumulating, usually there are accomplishments or derivatives of accomplishments, right?

25:13So you get a Rolex because you achieve something professionally, you have extra income, and then you can spend, I don't even know what Rolex costs, like 20 grand, 15 grand. So you get a Rolex. You and I don't know. So what's happening though is it's actually not the Rolex that's making you feel good. It is the achievement of getting it. It is the flex. It is the status. It is the status of being like, hey, I'm a really important person in my company because I have a Rolex. And so what is really happening here is that people are starting off, and this is very, very common in driven professionals, with extremely low self-worth.

25:53And look, a lot of really successful people were like huge nerds. Zuckerberg, right? They were just big dorks, myself included, in middle school. They were nerds. They were second-class citizens compared to the jocks. No one wanted to date them. They always got picked last in whatever draft activities. They were the losers, right? Well, guess what? You don't just like snap your fingers and stop feeling like a loser. Feeling like a loser is different than not looking like a loser. And so what happens with all these driven people, and I'm saying this from firsthand experience, I was a loser. I was a nerd.

26:31I thought that no women liked me, people made fun of me, and I'm like, you all, I'm gonna prove to you that I'm awesome. And I'm gonna work so much harder on everything that I do than you guys. I'm gonna be rich and powerful. and then I'm going to laugh in your faces. Well, guess what? I did achieve a lot of things, but the loser feeling doesn't go away. In fact, it's almost like the behavior of an addict. It needs more just to feel satisfied because you basically don't value yourself based on who you are intrinsically. You value yourself based on what you do. So like you run the marathon, you're like, yeah, I'm fit.

27:08Well, marathon's over. You're like, well, now I feel lame. Let me do an Ironman. Now you do an Ironman. Yeah, you get the tattoo. You're like, oh, okay. Now I need to do an ultra. Until you can break that cycle of low self-worth, you're going to keep chasing external accolades or external power boosts, so to speak. And all this validation, while it's maybe self-validating to you or signaling to others that there's some sort of success there, I really do like that you mark it more as an achievement, almost like a trophy. Because when you get out of elementary school, there aren't that many trophies out there.