In short
Seven habits of great investors (automation, low costs, staying invested, diversification, long-term thinking, controlling behavior, continuous learning) plus listener Q&A on debt payoff and getting started investing.
Guests
No named guests. Host is Andrew (founder of MasterMoney.co). Q&A callers: Bryce (credit card, student loan, car loan; wants wife engaged and an investing/debt order); Isaac (pool repair contractor; credit card debt; HSA; asks about future investment plan and “green” investing); no other guests mentioned.
Key claims
Automate contributions; auto-escalate and route raises to 401(k) to boost savings (cites Vanguard and Richard Thaler “Save More Tomorrow”). Fees matter: a 1% fee can cost hundreds of thousands to millions via compounding. Don’t sell during downturns; missing best S&P 500 days sharply reduces returns. Diversify via index funds; most individual stocks underperform. Think in decades, control behavior (policy statement, less checking, pre-commit buying drops), and keep learning (books, history, journals).
Notable examples
“Andy” vs “Susie” fee case studies; JP Morgan S&P 500 best-days clustering; NVIDIA as “needle in haystack” example.
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Chapters
Tap a time to open that second in VOThe Importance of Automation in Investing
0:46 to 4:05
Learn why automating your investments is crucial for financial success.
“podcasts, Spotify, or your favorite podcast player.”
The Impact of Investment Fees
4:05 to 6:49
Understand how low fees can significantly affect your investment returns.
“Let me give you another example of this, okay?”
Staying Invested During Market Downturns
6:49 to 12:16
Discover the importance of remaining invested through market volatility.
“And for this person, we're going to call them Andy.”
The Power of Diversification
12:16 to 14:00
Learn why diversifying your investments is essential for long-term success.
“to sell during downturns, especially when you have a solid investment plan that has been proven for years and years and years.”
Understanding Market Returns and Risks
14:00 to 16:42
Learn about the disparity between market returns and individual stock performance, emphasizing diversification.
“And of the 10 % that do, they are not the same year in and year out.”
Understanding Market Returns and Risks
16:45 to 17:55
Learn about the disparity between market returns and individual stock performance, emphasizing diversification.
“If you've been listening to this show for a while, you know it's not just me anymore.”
Understanding Market Returns and Risks
18:01 to 19:13
Learn about the disparity between market returns and individual stock performance, emphasizing diversification.
“This is a job for Indeed-sponsored jobs.”
Habits of Great Investors: Long-term Thinking
19:26 to 22:00
Explore key investing habits focused on patience and long-term strategies for success.
“Number five is they think in decades and not quarters.”
Controlling Behavior in Investing
22:00 to 24:38
Learn methods to control emotional investment decisions and maintain discipline.
“And for me, trying to get a rate of return similar to what the S &P 500 is doing is really important.”
Continuous Learning and Improvement
24:38 to 28:00
Discover the importance of continuous learning and community engagement in investing.
“if you want to, some of the old episodes.”
Show all 17 chapters
The Importance of an Investing Journal
28:00 to 29:40
Learn why keeping an investing journal is crucial for understanding your decisions.
“But an investing journal is one of those things that I think most people should have, understanding why you're buying, understand why you're selling, especially if you invest in individual stocks.”
Q&A: Tackling Debt and Building Wealth
30:40 to 37:20
Advice on prioritizing debt repayment versus investing for financial stability.
“I'd especially appreciate advice on getting my wife more financially engaged and creating realistic debt payoff strategy while determining when and how we should be investing while paying our high interest debt.”
Q&A: Tackling Debt and Building Wealth
38:40 to 39:45
Advice on prioritizing debt repayment versus investing for financial stability.
“That's 50 % off your first year at monarch.com with code PFP.”
Q&A: Investment Planning While in Debt
39:52 to 42:01
Discussing how to prepare for investing while managing existing debt.
“Isaac says, hey, Andrew, I love the podcast.”
Investing Fundamentals and Tracking Companies
42:01 to 44:01
Learn the importance of researching and tracking companies before investing.
“that I kind of talked about in the previous question.”
Investing Fundamentals and Tracking Companies
44:06 to 45:26
Learn the importance of researching and tracking companies before investing.
“Now, before we get into the next question, I want to tell you about one of my favorite things, which is delete me.”
Navigating Bonuses and Debt Decisions
45:39 to 48:09
Get insights on the best use of bonuses in relation to debt and investments.
“We got the loan because it's 2.9 % and I'm just making the minimum payments because it's earning 3.1 % in my high yield savings account.”
Transcript
Automatic transcript. May contain errors.0:00On this episode of the Personal Finance Podcast, the seven habits of great investors plus money Q &A.
0:15What's up, everybody, and welcome to the Personal Finance Podcast. I'm your host, Andrew, founder of MasterMoney.co. And today on the Personal Finance Podcast, we're going to be diving into the seven habits of great investors. If you guys have any questions, make sure you join the Master Money newsletter by going to mastermoney.co slash newsletter. And don't forget to follow us on Apple Podcasts, Spotify, YouTube, or whatever podcast player you love listening to this podcast on. And if you want to help out the show, consider leaving a five-star rating and review on Apple podcasts, Spotify, or your favorite podcast player.
0:54Plus, if you want to get one-on-one coaching help from me and you make over$100 ,000 per year, shoot me an email at andrewatmastermoney.co. We're going to take a small handful of people through a program that is going to transform their finances, but you have to be able to qualify. So shoot me an email if you are interested in that. Now on today's episode, we're going to go into the seven habits of great investors. And then we have a bunch of great questions that we want to go through as well. So I am really pumped to dive into this. So when we think about great investors, we want to understand some of the habits that a lot of them have in common.
1:29So some investors may have very different strategies. They may have very different thought processes on how they invest their money, but they are going to have very similar habits in terms of how they think about investing and some of the things that they do. And so the number one thing I want many people to think through is that many great and successful investors actually automate their investing. This is number one. Now, this is the single biggest predictor on whether someone is actually gonna get their money into their brokerage account or get their money into their 401k or get their money into their Roth IRA or not, is to automate your money.
2:01In fact, Vanguard's 2026 How America Saves report built on 25 years of data covering millions of 401k participants. So just so you know, there's millions of people in this data shows that plans with automatic enrollment have a 94 % participation rate, while plans that do not has a 64 % participation rate. That's a 30 % difference for people who have 401k plans that force them basically to start to automate their money. And the cool thing about this is, is automation allows you to not have to worry about it. You're not gonna miss this money anymore. Instead, you're just gonna automatically contribute money into your account.
2:41Now, the same report actually shows that more than 70 % of auto-enrolled plans now include auto-escalation, which raises the contribution rate at one point every single year. Now, this is something I think many investors should consider, is being able to increase the amount that you're investing on a yearly basis. So let's say, for example, that in year one, you decide, okay, I'm going to invest 15 % of my income. In year two, you decide I'm going to invest 17. You're going to increase it by 2%. In year three, you're going to increase it by 2 % again. And 19 % of your income is going to go towards this.
3:13In year four, 21%. In year five, 23%. In year six, 25%. You can see where I'm going here, where you're able to increase the amount that you're investing every single year without really feeling it. You're not having to rip the bandaid off all at once. Instead, you're just slowly turning up the dial, slowly boiling that frog, where it's not as painful for people. And I think for many of us, trying to make a quick adjustment and trying to adjust all your finances at once and trying to invest as much as you possibly can when you're not used to it can be a difficult thing to overcome maybe you do it for a couple of months but then you're going to fall backwards and start all over again and so what i want you to do is slowly turn up that dial if this is difficult for you that way you won't feel it as much and if you do this automatically it's going to be so much easier Let me give you another example of this, okay?
4:08You pay property taxes properly. So for all my homeowners out there, when you pay property taxes, every single year your property taxes go up, especially over the course of the last couple of years. And when your property taxes go up, you don't feel the extreme pain that happens when they go up. You know, a lot of times they go up a decent amount, but you're not feeling the extreme pain. It's not like the most painful thing ever. Sure. It's annoying to have to pay more, but it isn't the thing that's like driving you to really transformed the way that you're thinking about, you know, homeownership.
4:39You're not going to go sell your house right away because it increased by 1 % with the property taxes or 2 % or 5 % or whatever's going on in your state. And so this is the same concept when it comes to automating your money. It's really, really important to think through how can I find ways to build wealth without it being painful? Because there's many ways to do it and automating your contributions is a big one. So auto escalations shows that most participants are above that 12 to 15 % target where they need to be. And so auto escalation really is a big thing now for a lot of folks. There's a guy named Richard Thaler, and he had this study called Save More Tomorrow.
5:18And he found that employees who agreed to have future raises automatically routed into their 401k went from an average savings of 3.5 % to 13.6 % over three and a half years alone. Just auto increasing and auto routing your raises allowed you to increase the amount that you're saving over the course of three and a half years. This is a really important stat. And I think this is a really important thing to look at because for many of us, just doing stuff like this, just auto routing raises so you don't feel it anymore or taking those extra dollars and putting them towards wealth building activities when you get a raise is super important.
6:00People nearly quadrupled their savings rate without even feeling that pay cut, quadrupling their savings rate. And I think this is what most people need to understand. So what do you need to do? Well, first automate your 401k contributions. Every single person should be doing that. Automate your Roth contributions and automate your contributions to your taxable brokerage. Automation is gonna solve a ton of problems for you. Now, if you don't know how to do that in Master Money Academy, we literally show you exactly how to do that and teach you how to invest automatically. So if you are interested in that, make sure you check out the link down below in the bio.
6:33All right, number two is some of the most successful investors keep their costs low. Now, many of you may be saying to yourselves, well, it's only a 1 % fee. That's not a big deal. A 1 % fee is incredibly impactful to your portfolio. you. I'm going to give you a case study of who I'm going to call the accumulator. And for this person, we're going to call them Andy. All right. Andy is a 30 year old with$50 ,000 invested. And he adds$1 ,500 a month over the course of 35 years. Now the market is going to return 8%. And this is before fees and everything else. So Andy invests in low cost index funds, charging nothing and ends up with$4.26 million in that account.
7:12But if he was invested in a mutual fund or a fund with the same exact return, but had a 1 % fee on a yearly basis, and this is at a 7 % rate of return for reference, he would have$3.28 million. So a 1 % fee would cost him roughly$980 ,000, close to a quarter of the entire balance, just a 1 % fee. And so this is what I want you to understand. Now let's look at a case study with the multimillionaire here with even larger amounts of money. Because I want you to see the impact of this, okay? Let's say Susie. Susie retires at the age of 50 with a$2 million portfolio and never adds another dollar. Now, over the next 30 years, at a 7 % rate of return, that portfolio is actually gonna grow to$16.2 million.
8:02Now, this is an amazing power of compound interest. If you didn't realize this, if you get$2 million invested, don't touch it again, all of a sudden that can grow to about$16.2 million. With a 1 % fee, it would drag it down to about a 6 % rate of return. And so with that, you can see that your portfolio would only be at about$12 million. This is a$4 million difference for that 1 % fee, a 25 % reduction. So that fee cost them$4.2 million, more than double the amount they actually started with when they first were beginning this portfolio with 2 million bucks. And I think this is where most people need to understand.
8:40Reducing fees and making sure you cut out fees is really, really important. Understanding an expense ratio, understanding all the underlying fees that are associated with your portfolio is super important and they can save you millions and millions of dollars. And so I think for many people out there, you gotta make sure that you understand exactly how much you're spending in fees and then ask yourself, is this fee really serving me or is this something that I can cut out and try to find a lower cost option? That is number two, okay? So make sure that you are really aware of how impactful fees can be.
9:16Number three, great investors stay invested during downturns. I cannot tell you how many people send me DMs on social media when the market has a five or 10 % pullback and start panicking. And they say to me, Andrew, the market is pulling back. I cannot believe this is happening. Should I start to sell my investments? that is your emotions talking that is the emotional side of investing and for many new investors it can feel daunting it can feel crazy it can feel stressful it could be scary you feel as though well what if this goes all the way down to zero but you have to understand that this is a very normal event and for those of you who feel as though you want to sell during a downturn you may be saying to yourself right now oh i would never do it but until you go through it and you feel it, that is where you're really going to test your strength in this.
10:06Okay. And so for many of us, we need to realize that if we miss some of the best days in the market that can drastically change our return pattern. Okay. So JP Morgan runs an analysis every single year and$10 ,000 invested in the S and P 500 from July, 2004 to July, 2024, a stretch that includes the 2008 financial crisis. There's the COVID crash in the 2022 bear market. We had all three of those during that time frame, someone who was fully invested the whole time had 10.5 % per year, and their portfolio would have grown to roughly$73 ,700. Someone who missed the 10 best days, this is just so crazy.
10:47Someone who missed the 10 best days, their portfolio would have had a 4 % reduction in the rate of return, and they would only have$33 ,300. Someone who missed the 20 best days, their return would be like a high yield savings account at 3.6 % a year, roughly$20 ,300 is what they would have. And then if you miss the 30 best days, you'd only get 1.4 % per year. You could get more than that in a savings account and you would only have$13 ,200. My goodness, is that a crazy stat? Just think about this for a second. The 10 best days reduce the amount, your rate of return by 4%. That is a massive amount of money because if you start to plug this into larger numbers and you're investing consistently every single month and you just panic every time the market goes down, this is going to be a really, really important lesson for you to learn.
11:42Now, here's the crazy part. Over that 20-year period, seven of the 10 best days happened within 15 days of the 10 worst days, meaning the best days cluster right next to the worst days because the biggest rallies are violent bounces coming back from a panic. It's from the market actually panicking. It's from investors panicking, selling their securities, and all of a sudden more money pours into the market. My friends, if you sell during downturns, that is gonna be a huge, huge factor to how much wealth you're actually gonna have. It is a multimillion dollar decision to sell during downturns, especially when you have a solid investment plan that has been proven for years and years and years.
12:22Now, if you're looking at individual stocks and those stocks are crashing because of other indicators, that's a different story. But what I'm talking about here is index funds, ETFs, target date funds, mutual funds, those types of funds that are diversified, that are self-cleansing, that do what needs to happen so you don't have to worry, those are the types of funds that you want to avoid selling during downturns, okay? And so I want you to just make sure that you understand some of these stats because they are really important to making sure that you are on top of your money and on top of the way that you think about building wealth.
12:55All right, next one, number four, is they diversify. They don't chase returns. They make sure that they are diversified. So Hendrick Bestbinder at Arizona State looks at every US stock from 1926 through 2016. And he looked at roughly 26 ,000 companies. And more than half of all these individual stocks delivered a negative lifetime return. So more than half of individual stocks from 1926 to 2016 had negative returns. The median stock underperformed one month treasury bills. Just 4 % of companies accounted for all the net wealth of the stock market created over the last 90 years. The other 80 % collectively matched T-bills.
13:40Boy, oh boy, is that telling. What does that tell us? If you're trying to choose individual stocks and you're not doing this at a small portion of your portfolio, then the likelihood that you are going to underperform the market is going to be pretty high. And we have said this over and over again, that 90 % of professional investors do not outperform the S &P 500. And of the 10 % that do, they are not the same year in and year out. Why is that important? Because if you are an individual stock investor, which there's nothing wrong with that, I own lots of individual stocks. I love investing in individual stocks, but you just need to understand the risks that you are taking here because the market's long-term return of about a 10 % per year is not the typical stocks return.
14:20It's not the individual stocks return. It is a handful of enormous winners pulling up thousands and thousands and thousands of losers. Now, nobody knows in advance which companies are going to land in that 4 % range. Nobody knows which are going to be the outliers. But once those companies start to take off, they can show themselves pretty quickly. A lot of times I see people talking about they invested in NVIDIA 10 years ago. Now, NVIDIA is the most powerful company in the world right now, and they are the leader in the AI race. And when we look at something like NVIDIA, and you go back 10 years, and you tried to pick NVIDIA, which is like trying to pick a needle in the haystack, that is going to be a very hard thing to do.
15:01So instead, what if you bought the haystack, but you still had the ability to share the upside of what NVIDIA is doing? That's what index funds do. You buy the haystack, and they are self-cleansing. Any company that does not do well, they pull them out of the index and put a better company in. That's why we invest in index funds and ETFs and why it is so important to diversify. Diversification protects you against risk. Diversification protects you against yourself choosing the wrong investments. Diversification is going to be the moat that allows you to continue to invest. And so for many of us, we just want to make sure that we are buying the right stocks and buying the right portfolio based on our risk tolerance.
15:40When I started the Personal Finance Podcast, I had no idea how big it could become. I just knew I had something I wanted to share, so I started putting it online. And looking back, I definitely wish I would have started a decade earlier. One of the horror parts about building something online, though, is making it look professional. A website used to mean hiring a developer, figuring out design, and potentially spending thousands of dollars. In fact, on my website, I spent tens of thousands of dollars. That's what impressed me when playing around with Hostinger's AI website builder. I told it what kind of website I wanted, and I built the first version in minutes.
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17:01That's why I'd use Indeed Sponsored Jobs. When workplace chaos hits, Indeed Sponsored Jobs helps you reach qualified candidates faster. Your job gets boosted in search results, so you're spending less time searching and more time interviewing the right people. Plus, you only pay for results, which I absolutely love. Sponsored jobs posted directly on Indeed are 95 % more likely to report a higher than non-sponsored posts. That's a huge advantage when you're trying to grow your business. Spend less time searching and more time actually interviewing candidates who check all of your boxes. Less stress, less time, more results.
17:39When you need the right person to cut through the chaos, this is the job for Indeed Sponsored Jobs. And listeners of this show will get a$75 sponsored job credit to help get your job the premium status it deserves at Indeed.com slash podcast. Just go to Indeed.com slash podcast right now and support our show by saying you heard about Indeed on this podcast. Indeed.com slash podcast. Terms and conditions apply. Need to hire? This is a job for Indeed-sponsored jobs. Now, if you watch this podcast on Spotify, Apple Podcasts, or YouTube, you probably noticed the wood slat walls behind us. We wanted this podcast set to look professional, but also not be a project that was overly complicated.
18:20And I found these slat walls on Wayfair, and it completely changed this space. And it's now basically the background that you see in every single podcast or piece of content that we record. And that's one of the things that I love about Wayfair. You can shop thousands of products across different styles and budgets, use customer photos and reviews to see how things actually look in real homes, and find something that fits your space. They also have Wayfair verified products that are hand-vetted by product specialists using a 10-point quality inspection. And with more than 20 million verified five-star reviews, you can feel a lot more confident about what you're ordering.
18:59I've used Wayfair for this studio and our home, and I absolutely recommend them for your space. So transform your space with pieces that hold up to real life. Join Wayfair Rewards today and get 5 % back on every single purchase. Head to Wayfair.com or shop the Wayfair app for all things home. That's W-A-Y-F-A-I-R.com. Wayfair. Every style, every home. Wayfair. Every style, every home. Number five is they think in decades and not quarters. So Warren Buffett, for example, is a great person who talks about this all the time. So Warren Buffett has a quote that says, our favorite holding period is forever.
19:42And he says the stock market is the device for transferring money from the impatient to the patient. And even in one of his shareholder letters, he has one of my favorite quotes. He said, someone is sitting in the shade today because someone planted a tree a long time ago. Buffett bought his first stock at the age of 11 and made over 95 % of his net worth after his 65th birthday. His wealth is almost entirely a story of buying and holding. And I think for many of us, we need to understand that if you're not willing to hold a stock for 10 years, do not buy it for 10 minutes. Charlie Munger said this, the big money is not in the buying and selling, but the waiting.
20:20And I love that quote because this is the reality. The longer you wait, the longer you hold your stocks and investments, the better the return potentially can be. Jack Bogle, the founder of Vanguard, said this. Don't look for the needle in the haystack, just buy the haystack. And on timing, he said the idea that a bell rings to signal when investors should get into or out of the market is simply not credible. After nearly 50 years in this business, I do not know of anybody who has done it successfully and consistently. Peter Lynch, one of the greatest investors of all time who ran the Magellan Fund, had 29 % annual returns for investors over the course of 13 years, said far more money has been lost by investors preparing for corrections or trying to anticipate corrections than has been lost in the corrections themselves.
21:08I love that quote because it tells me what so many people do right now is they're waiting for those corrections in the AI bubble. They're waiting for those corrections, you know, during every year, they're waiting for those corrections to happen. There's so many different indicators that are going on. But instead, just making sure that you stay invested is super important. Morgan Housel on this psychology of money. The most powerful thing in investing is not getting a high return. It's getting a decent return that you can stick with for the longest period of time. So you want to ask yourself, does my investment plan allow me to get a decent return for a long period of time?
21:41It's not the best return. It's not the highest return. It's not buying every single chip maker and making sure that you are getting to the top of the hill, but instead it is making sure that you are thinking about this in decades and you are getting a high enough return that is going to allow you to achieve financial freedom when you want to. That is your goal. And for me, trying to get a rate of return similar to what the S &P 500 is doing is really important. And so that's what I always try to target. My goal is always to look at the market, look at the S &P and then benchmark against that. Number six is they control their behavior.
22:17So one of the things that you need to understand is you can't control what's going to happen in the market. You can't control what the market is going to do day to day or week to week or month to month. All you can control is your own behavior. Now, Dow Bar has an annual study of investor behavior. And this has shown that year after year for three decades, the average equity fund investor earns several percentage points less per year than the funds they own. The funds perform fine, but the investors buy high and they sell low. and they move in and out at the wrong moments. So how do investors control their own behavior?
22:50What are ways that you can control your own behavior? First is you write out an investment policy statement before you need it. You need to have an investor's policy statement that tells you exactly why you're investing in what you're investing in. Secondly, is you check your accounts less often. The more frequently you check your accounts, the more you're gonna react to fluctuations day to day or week to week. three is they pre-commit to buying during drops every time there's a 20 drop you say well if i have a little extra cash on hand or a little cheddar cheese maybe i'll throw some extra cash on hand at that drop and so you tell yourself i am going to pre-commit to buying drops and i'm not going to sell during downturns they separate their play money from the real money this is a big thing that i learned early on is i have accounts that i have fun with i enjoy investing and so i spend less than 5 % of my portfolio on things I enjoy.
23:41If I wanna buy a little Bitcoin here, I'll do it. If I wanna buy a little gold here, I'll do it. If I wanna buy a bunch of chip makers to see if I can hit a home run with some AI stocks, I will do it. But I'm not gonna do it with my real money. I'm not gonna do it with my financial freedom. I'm not gonna do it with the money that really, really matters. And so for me, this was a lesson early and often. Now I've told this story before. I tell it all the time on the podcast. But the biggest lesson was I lost all my money in one trade on a penny stock when I was 18 years old. It wasn't a lot of money.
24:10It was like$1 ,000, but I didn't have a lot of money to my name. And that lesson taught me everything about how to be disciplined as an investor and how to shrink the amount of play money that you use. Another thing that helps you control your emotion is muting the noise. So we had a show for a while called The Business Show, a little over a year. And The Business Show's purpose was to mute the noise, to find the stock market news that was out there that really was impactful to your money, that was a huge impact to your dollars. I think it's still, you can go listen to it if you want to, some of the old episodes.
24:40Because the financial news is built to generate urgency. It's built to make you try to react, to try to do something. But if you don't listen to the financial media, all of a sudden, it's a very calming feeling. You get a little zen coming in when you're going that route. You get a little zen when you move the financial media and the noise out of your way. And I think it's good to be informed, especially on your individual stocks, especially on some of the stocks that you're interested in. But to be informed in a way that is going to be fruitful long-term. Another thing they do to remove their emotions from the equation is they increase contributions with every raise.
25:12Every single time you make more money, you increase those contributions. So I got into the point in time, for example, where now I have my baseline expenses. I know how much I'm going to be spending every single month. And every extra dollar that comes in outside of that, I even have like my, you know, fun money and money that I want to travel with, all that stuff baked into that. Every single dollar that comes in outside of that goes to investing. no matter how much or how little it is. And this is because I figured out the number that allows myself, my wife, my kids, my family to all be happy.
Read the full transcript
25:43And then everything above that just boom, goes towards investing, goes towards financial freedom, goes towards building our portfolio, goes towards building our financial security. And I think that is so important for many of us to do is to understand what that number is and everything above that is just keep on investing. The last thing is they remember their savings rate is the only variable they fully control. And your savings rate is what's going to allow you to build more wealth. It's gonna allow you to allow that portfolio to grow. And so making sure that you are understanding where your savings rate is, is really, really important.
26:17Now, number seven, this is the last habit of great investors, is they keep learning. Many of the best investors I have ever seen read a lot. They constantly are reading. Warren Buffett reads five pages a day. Charlie Munger is known for never stopping reading. All he did all day long was read, read, read, read, read. In fact, he read to his detriment of his family life where his kids just remember him sitting there and all they remember him doing is sitting in the living room and reading, not playing with them, not hanging out with them. Warren was very similar. And all they would do is read. If you wanna be a great investor, you need to read.
26:51You need to understand how to learn. You need to get into community with other investors who are all working on similar things. You need to make sure that you're watching and listening to content. like podcasts, just like this, because if you are not constantly learning, if you're not constantly reading and you're not constantly getting into community, you won't be as good of an investor as you could be. One thing I would say is to read the classics. There's a lot of classics out there, things like The Psychology of Money, The Little Book of Common Sense Investing, The Simple Path to Wealth, A Random Walk Down Wall Street, Buffett's shareholder letters are fantastic and those are free online.
27:24Reading all of those can really give you a great outlook on how the market works. Secondly, study market history instead of market predictions. The more you study market history, the more you're going to see trends. The more you're going to see how the market works. Now, sure, history may not be exactly the same, but it does repeat itself. And if you go back and look at the trends of every single downturn, you can see what happens during that upturn. And you can see a lot of different trends that you can take home and use. Three is they learn from their own mistakes on paper. And the more you read, the more you'll even be able to learn from other people's mistakes.
28:02But an investing journal is one of those things that I think most people should have, understanding why you're buying, understand why you're selling, especially if you invest in individual stocks. They also understand what they own. So the more you are learning, the more you are understanding what you own so you can actually make moves if you need to or trim or whatever else you need to be doing. They learn the tax side, meaning you understand the tax implications of each and every single investment. and they stay curious about even the boring stuff. But the most important thing I think is surrounding people with one step ahead of you.
28:33Learning from people who are ahead of you, learning from people who have built portfolios that are continuing to grow, that have been doing this for a long time is really, really important. And so I think for many of us, it's really important to understand how to build a portfolio properly and how to do this in a way that makes a ton of sense. The more deeply you understand why a plan works, the easier it is to stick with when it's getting tested. So I think that's super important to make sure you're surrounded by other people who can help you along in your journey. So if any of you are new to investing, even if you just have$5 that you can invest every single month, I would love to invite you to join Master Money Academy.
29:11Master Money Academy, which is gonna be linked up down below in the show notes, is where I teach you how to invest step by step. I teach you the principles we talked about in this episode and I show you exactly what to do. So I would love to invite you to join Master Money Academy. We will link it up down below where you can go from someone who is starting from zero, or even if you're an experienced investor, all the way to someone who has built a portfolio for financial freedom. That's our entire goal inside of Master Money Academy and would love to see you inside. Now let's get into some of your questions.
29:44All right, the first question is from Bryce. And Bryce says, hi, Andrew. I'm reaching out because I'd really like some guidance on how my wife and I can become more financially aware and get on the same page plus build a stronger financial future together right now we have about fourteen thousand dollars in credit card debt at approximately 23 percent interest 55 000 student loan debt and about 9 000 remaining on a car loan at 17 percent interest with the high interest rates i know paying down our debt needs to be the major priority while also learning how to save and invest i started investing in the stock market last year and have been putting roughly 100 to 150 per month into investments i want to continue building that habit while also making sure we're approaching our debt and investing in the right order.
30:23Our long-term goal is to become financially successful, build wealth together, and ideally be in a position to retire at the age of 60. I also want my wife and I to both understand our finances and how to actively participate in making financial decisions rather than just having one person handle everything. What would you recommend for the best place for us to start? I'd especially appreciate advice on getting my wife more financially engaged and creating realistic debt payoff strategy while determining when and how we should be investing while paying our high interest debt. So this is a great question, Bryce.
30:54And there's a number of different things that are happening here. So first, I'm going to address the debt. Second, I will address how to get your wife on board as well, because I had a fun experience doing that. So this is going to be fun. All right. First, when it comes to your debt right now, we are looking at credit card debt at 23 % interest and you have a auto loan at 17 % interest. Those are the two that I'm concerned with right now. so in reality both of those pieces of debt at twenty three thousand dollars we need to attack at full force and so i commend you for starting the building and building the habit of investing and if you want to invest a small amount of money every single month to build the habit i am completely fine with that but 150 bucks that could be going towards something that is charging you 23 interest right now is a delta that is probably too high what we need to do is take as much of our money as possible and putting it towards the credit card debt first and then putting it towards the auto loan second is going to be the two most important things that I would like you to do.
31:51So attacking that credit card debt at that 14 % interest rate should be the number one priority. Every extra dollar, I would sell stuff to be able to pay that down if you can to try to get rid of that. In fact, I would drive for Uber Eats to get rid of that if you could, because that is compounding against you. And that balance is not going to go down very quickly, if at all, if you're just making the minimum payments. So you must make extra payments in order to get rid of that balance because that interest rate is so high. And what I would consider that is a pants on fire emergency. We have a lot of listeners who are in credit card debt.
32:21And if you are in credit card debt, that is a pants on fire emergency. We must, must, must make sure that we are getting rid of that debt first, okay? So that is number one. And the number one big thing we wanna do is between that and then your car loan is the second one. if you have an okay credit score what i would recommend with the car loan is to go to your local credit union and see if you can refinance that rate is astronomical a 17 interest rate on a car loan it should be criminal in my opinion that is way too high and so what i would do is try to refinance that car loan as soon as you possibly can now if you don't have the credit to do it find a way to see if somebody will refinance that for you okay because that is number two because paying 70 % interest on that is really, really important.
33:07The student loans, I am less concerned with because you can pay those over time. So making the minimum payments on those while you're paying everything else off is super, super important. Now, paying off this debt is going to take some time. And so in the meantime, you have the perfect opportunity here. And this is where you start to learn about investing. I think taking the time to learn about investing during this timeframe can be really, really helpful. I would probably, because of the debt, I would tweak that number down from 100 to$150 per month in investments. You can maintain the habit, but I would bump that down to like 25 bucks a month, only because you want to maintain the habit.
33:40And I would take those extra dollars and put them towards the debt because that 23 % interest is going to be much higher than the returns that you would ever get in the market. The market on average returns about 10 % to investors over the course of the last 10 years. In fact, the S &P 500 has returned even more. It's been a little bit higher, but we can't rely on that. We want to make sure that we are understanding that even if it was a little bit more, it's still less than the 23 % interest that we have on these credit cards. And so we want to get as much towards those credit cards as we possibly can while you're getting your investor education.
34:11A couple of things I would recommend is continuing to learn more. You can go to the local library and pick up a couple of books on investing. I would recommend the little book of common sense investing is number one, when you are just getting started. Number two is a random walk down Wall Street. That is a wonderful book. Number three is the Boglehead's Guide to Investing. Number four, if you haven't read The Simple Path to Wealth yet, I would read that. And five is the psychology of money. If you're just getting started investing, those are the five I would start with so that you can have an understanding of where you are going with this, okay?
34:42And then I would spend some time just kind of understanding the market, understanding what your investment plan is. Then I would write out an investment thesis. I would write out kind of your one-page document that tells you why you want to invest the way that you want to. I would start to use some compound interest calculators and understand, okay, how much could this money grow once this debt is gone so I could take these extra dollars from debt and put them towards wealth building? That's gonna motivate you. It's gonna motivate you so much more so you can see how this money is gonna compound over that timeframe.
35:10And I think for a lot of folks that are out there, having the ability to do this is really, really important, okay? So that's a great one there. The next thing is getting your wife on board. So this is something where it's a two-part series, okay? Part one is sitting down with your wife and talking through all of your dreams and goals, talking about the outcome that you want to happen here. Imagine you wake up one morning and you're both debt-free. You have money that's getting invested every single month. And you're waking up, imagine where you're waking up. Maybe you're waking up in the mountains or you're waking up, you know, on a beach.
35:48Because you set yourself up today, you are able to do this, this, and this. And I want you to talk to your wife about your dreams. I want you to talk to your wife about her goals. I want you to talk about your goals and dreams together and some of the things that you want to do in this life. And then you can bring it back and say, well, guess what? The way that we get there is by just mastering this. Mastering our finances is going to allow us to have the ability to get to our hopes, our dreams, our goals. And that's what I want for you. because if you start talking through finances in a way that doesn't make a ton of sense to someone or just throw in financial jargon at her, she's never gonna wanna do this.
36:29But if you talk about the dream and the outcome, that's the direction you wanna go. And so it's gonna create this awesome space for you both to first, always talk about dreams first, then go through the rest, okay? And then meet 30 minutes every single month. One of the things I would say is if you are getting out of debt, that's the time to really have a line by line item budget. And so making sure you have something like a zero based budget is super important. That way you can know how much money is coming in and how much money is going out. And once you know what that delta is, take every single extra dollar and throw it at that debt.
37:04Get that debt paid down as fast as you possibly can so that you can invest more. So you can take more dollars, put them towards investing so you can achieve those goals you actually want to achieve. But if you have any questions on this, please let me know or shoot me an email. would love, love, love to help you. And this is going to be one of those things that I'm really excited to see you guys pay off that debt and then move on to your investing phase. It's going to be really awesome to see that. So really excited for you guys and great, great questions here. If you have any questions on any of that, please let me know.
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38:12It gives me confidence that nothing is slipping through the cracks. I also love the AI Weekly Recap because it'll flag spending changes, upcoming expenses, or shifts in my net worth before they become a problem. Instead of reacting after the fact, I can make adjustments early. It really feels like having a financial advisor in your pocket. Write your own money story with Monarch. Use code PFP at Monarch.com to get your first year of Monarch Core half off at just$50. That's 50 % off your first year at monarch.com with code PFP. It's kind of amazing how much can change in just a single year. Every summer, the kids are a little bigger, a little more independent, and life looks a little different than it did the year before.
38:57And it reminds me that while we can't predict the future, we can prepare for it. That's one of the reasons I like PolicyGenius. See, PolicyGenius isn't an insurance company. They're an online marketplace that lets you compare life insurance quotes from some of America's top insurers side by side for free. And their licensed team helps you compare coverage, prices and terms, answers your questions and even handles the paperwork so you can get the right policy without the hassle. For me, having life insurance isn't about expecting something to happen. It's about knowing my family is protected so I can actually enjoy these moments together instead of worrying about what comes next.
39:36And with PolicyGenius, you can find 20-year life insurance policies starting at just$276 a year for$1 million of coverage. Head to PolicyGenius.com to compare life insurance quotes from top companies and see how much you can save. That's PolicyGenius.com. All right, the next one is from Isaac. Isaac says, hey, Andrew, I love the podcast. I listen on Spotify and I replay some of my favorite episodes to keep me focused and motivated. Awesome, Isaac. That's fantastic. I'm 38 years old and I bring about$5 ,000 in per month as a private contractor doing pool repair services. This pays for the bills and my minimum payments.
40:12I also do some handyman and residential remodel work on the side. This goes towards additional debt payments. Well, awesome. You're doing some extra work to pay down some debt. Before I started my business three years ago, I hadn't been very intentional with my finances. But now I have a partner, my own company, and a 12-year-old that I'd like to leave something for while building towards retirement. I took your advice and started looking at my finances every morning using a good old-fashioned balance book and a cross-reference with an app called Quicken. Awesome. I find that paper mixed with an app works best for me.
40:42I'm currently on track to have my work truck paid off by the end of this year. I also have about$9 ,000 in credit card debt to pay off, and I have an HSA that I still keep active by making a very small deposit once a year, but I don't really do much with that at the time. I feel like in my current position, I just need to keep my nose to the grindstone until I can start working to get my one to three months of emergency funds put away and then high interest debts, of course. I think my biggest financial question right now would be, what can I do in the meantime to figure out what my investment plan should be once I get to that stage?
41:13I'm interested in green investing and should I start finding and following companies that I like to invest in preparation? Also, do you have any tips on saving receipts for the HSA as a bonus question? Yes. So let's start with the HSA question. we'll go to the other stuff. Okay. First of all, awesome. You are working towards the right goals. Now, what I would say is paying off the credit card debt before your truck. If you're making extra payments towards the truck, take that, shift it, put it towards the credit card debt is number one. Okay. Number two is then you can make those extra payments for the truck, but wanting to build generational wealth for your family, your partner, your 12 year old son, that is absolutely amazing.
41:46And that should stay the motivator moving forward. Now, when you start to think through what your investment plan should be, I am very pro starting to do your research, starting to learn more about investing while you are still paying off debt. And so I would read the books that I kind of talked about in the previous question. The Simple Path to Wealth, A Random Walk Down Wall Street, The Little Book of Common Sense Investing. All of those books you should definitely look into and start to read. And you can listen to them on audiobook as well. If that's your vibe or your mode, you can definitely do that.
42:17If there's companies you want to invest in, following them is very important because you want to be an educated investor And even before I invest in anything, I follow the companies for a while because I want to understand what they're doing. I want to look at their earnings reports, those types of things. So like there's some major investments I've made over the course of the last couple of years that I really followed those companies for a couple of quarters before I decided to invest. I am a slower investor when it comes to some of that stuff. I am not reactionary whatsoever. I make sure that this is something I really want to invest in before I put my dollars to work.
42:46And so many times that's something I do. So you can do that same exact thing right now. You can create a watch list of some of the investments that you are interested in. Maybe you are interested in, you know, a couple of different segments, sort them by segment and continue to watch those investments. Now, you can do this on your phone with a stock market app if there's not a lot of them. If there's more of them, then you can track them even with AI tools now that will allow you to track some of these investments and have the ability to kind of put it into some cool different things. Now, one thing that I like to do, too, is when I'm researching investments, I have a little spreadsheet that I created that allows me to put in a ticker symbol.
43:22And the spreadsheet gives me all the data and all the information that I would like about that specific company. I built it kind of with a couple of things in mind, but it allows me to see it all in real time. And so if you are interested in investing, that's another thing that you can do is start to build out some of your systems and then build out your mission statement, kind of what you're trying to do with your investments. That'd be the next thing I would do as you're starting to go through this process. And so you are on the right path, getting your one month, then your three month in your emergency fund and getting that debt paid down is really, really important.
43:50Once you have that foundation set, then you can begin that investing journey. And it's going to be so awesome to watch your money grow and have the ability to kind of move, move to the next level with that. So awesome question. I really, really appreciate you sending that in and great job thus far. Now, before we get into the next question, I want to tell you about one of my favorite things, which is delete me. Now, have you ever Googled your own name or have you ever looked at your home address or your phone number or your email. And if you Google this in quotations, you're going to see a bunch of information pop up.
44:22You may see your name. You may see the names of your family members, and you may see all of this data just sitting there on the internet. Well, this is data that someone can go out there and purchase and get all of your personal information whenever they want. Now, this is exactly why I use DeleteMe because DeleteMe finds your personal information and they go to hundreds of data broker sites and they remove it for you. They keep monitoring because all these sites are constantly relisting your information. And DeleteMe helps take it back all year long. Plus, you get a report that shows exactly what they found and what they removed so you don't have to lift a finger.
44:58So if you're working on building wealth right now, protecting your identity is part of the job. It is part of what you need to be doing in order to protect your wealth. One data breach or one phishing scam could undo years of your good financial decisions. And the cost of Delete Me is nothing compared to the cost of a stolen identity. I know I had my identity stolen. It was a very expensive process. So take control of your data with Delete Me. You can get 20 % off of your Delete Me plan when you go to joindeliteme.com slash PFP and use promo code PFP at checkout. That's joindeliteme.com slash PFP, promo code PFP.
45:38all right the last question here is from john john says andrew first off i love the show i've been listening for years and not sure why i wasn't signed up for the newsletter already i love that you give practical guidance and not just a beans and rice mentality i have a pretty good grasp of my finances but one thing i could use direction on is where to put my bonus i'm a warrior so my emergency fund is about 10 months and i maxed my roth at the beginning of the year i'm trying to decide whether or not to pay off my car loan at 3.9 percent hold it until january and then fully fund my Roth for 2027 or put it in a high yield savings account to help pay for my son's college loan for his junior year.
46:12We got the loan because it's 2.9 % and I'm just making the minimum payments because it's earning 3.1 % in my high yield savings account. I hate being in debt when I can pay something off, but math is math. I'm pretty sure funding my Roth is the right play here and could be curious if you agree. Thanks for all the content that you put out. So John, great question. I think this is something that a lot of people wrestle with. and as we start to look at some of this stuff the one thing i wouldn't do is probably pay off the car loan at 2.9 and if that student loan is 2.9 i probably wouldn't be super interested in paying that off either what i would look at doing is thinking through the order of operations for anybody listening right now if you get a bonus or something like that the order of operations is this one is making sure you have that one month emergency fund that is really really important sounds like you already have that covered two is making sure any high interest debt so any debt above a six to 7 % interest rate is getting paid off.
47:03Three, then getting the three months of expenses in your emergency fund. Sounds like you already have that. And then eventually he's trying to get to six. And then from there, investing those dollars. That's the key. So these are all low interest debts. I would not be concerned with those low interest debts whatsoever. Instead, I would be more concerned with taking these dollars and putting them towards something that will grow over time, especially if you're focused on your retirement and you're focused on growing your money. So me personally, in this situation, the Roth would be my move. That'd be the move where I would put these extra dollars and make sure that these extra dollars are getting covered before anything else.
47:34That's the one thing I would make sure that I do is have that Roth available, have that Roth locked in and then getting those dollars maxed out because you can't get those years back. Instead, you can keep those dollars and put them towards something that is gonna allow you to grow your money over time. So really great question, but that's exactly how I would do it. If that keeps you up at night, here's the one caveat. If the debt keeps you up at night and you absolutely can't stand it and you already are on track for your retirement goals and you're not worried about it, then you can pay off the debt in that instance.
48:03But if it's one of those things where you're okay making those minimum payments, I would just continue the minimum payments and then max out the Roth. Awesome, well, thank you guys so much for listening to this episode of the Personal Finance Podcast. Again, if you wanna build a portfolio for financial freedom, no matter where you're starting, then join Master Money Academy. That is exactly where we teach you how to invest and how to build a portfolio based on your specific goals. You could go from having$0 in a portfolio all the way up to building wealth. So that is exactly what we teach you inside of Master Money Academy.
48:35Also, if you guys have any questions, please reach out to me. Would love to hear from you. And if you wanna work one-on-one with me, send me an email, andrewatmastermoney.com, and we will send you the application. Thank you so much for being here. I truly appreciate each and every single one of you, and we will see you on the next episode.
From the publisher
The best investors in the world do not share a strategy, but they do share a set of habits. If you learn these habits of great investors instead of their stock picks, your portfolio would probably do better.
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What You'll Learn in This Episode
The seven habits successful investors share, regardless of their strategy
How automatic increases helped people nearly quadruple their savings rate without feeling it
What a 1% fee costs over a career, including one example where it takes $4 million off the ending balance
Why the best days in the market tend to show up right next to the worst ones
The research showing just 4% of companies created all the net wealth in the stock market
Practical ways to keep your emotions from wrecking your returns
Plus listener questions on paying off 23% credit card debt, getting a spouse engaged with money, preparing an investment plan while still in debt, and whether to use a bonus on low-interest loans or a Roth IRA
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Resource/s
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Best IRAs https://secure.money.com/pr/oe09b73d1952
Favorite Travel Credit Cards https://milevalue.com/best-credit-cards/?aff=mastermoney
Tool/s Mentioned
Compound Interest Calculator https://mastermoneyresources.com/investment-calculator-page
Book/s Mentioned
The Psychology of Money by Morgan Housel
The Little Book of Common Sense Investing by John Bogle
The Simple Path to Wealth by JL Collins
A Random Walk Down Wall Street by Burton Malkiel
The Bogleheads' Guide to Investing
Warren Buffett's shareholder letters, free at https://www.berkshirehathaway.com/letters/letters.html
Episode/s Mentioned
The Business Show https://youtube.com/playlist?list=PLHvdISl-a2chNMWZfkJra-15dS_vlKEt3&si=m0TPEfzeyMjIzEPb
Watch Next
How to Reach Financial Independence Without Putting Your Life on Hold with Justin Peters https://youtu.be/UuY_c3OuQ6I
5 Signs You’re Overthinking Investing! (Plus Money Q&A!) https://youtu.be/amtxpMBllmc
The 5 Levels of FIRE (Coast, Lean, FI, Chubby, Fat) https://youtu.be/cpZCevuXW1U
Type A vs. Type B Money Personality: Which one are you? https://youtu.be/ZoyLEwBMQdQ
The 12 Worst Money Habits (Ranked!) https://youtu.be/VEgX_BT5dA0
Connect with Andrew
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Question for you:
Which of the seven habits do you already have, and which one are you still working on?
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